Newell Brands said on Friday it would sell its plastics packaging unit Waddington Group for $2.3 billion, and added more brands to a divestiture plan aimed at streamlining its operations and cutting costs.
The sale of Waddington, which makes disposable cutlery and drinkware, is the first major divestiture after activist investors Starboard Value and Carl Icahn placed their nominees on the company's board last month.
Newell's shares were up 6 percent at $28.29 in early trading. The stock took a beating after the company, which sells everything from Sharpie pens to Crock-Pot cookware, first laid out plans in January to explore options for several of its businesses.
As part of its agreement with Icahn, Newell said in March its divestitures would bring in about $10 billion, ratcheting it up from its previous estimate of $6 billion.
Newell said on Friday it would add Jostens and Pure Fishing to the list of brands it plans to sell, with the expanded divestiture plan ultimately reducing its net sales and workforce by more than a third.
The moves come as the company's retailer customers such as Walmart and Target pare back inventories to cut costs as fewer shoppers visit brick-and-mortar stores.
"All of these assets should command competitive multiples ... the sale of Waddington validates that belief," Chief Executive Officer Michael Polk said during a conference call.
Newell said its divestiture process was "well underway" and expects to complete all transactions by the end of 2019 and become a company with net sales of about $9.5 billion in 2020.
"Investors never wanted Newell to own Waddington and likely underestimated the multiple a sale could bring," Renaissance Macro Securities analyst April Scee said.
The company also reported first-quarter sales that fell nearly 8 percent and missed analysts' estimates, mainly due to divestitures in 2017 and the liquidation of Toys 'R' Us.
But normalized earnings of 34 cents per share beat the average estimate of 26 cents, according to Thomson Reuters I/B/E/S.
"With continued organic weakness and conflict with Starboard ongoing, there's enough noise in the stock ... However, intended divestitures improve focus or help odds of successful restructuring," Scee said.
The company also reaffirmed 2018 net sales and earnings forecast.