SSL International, the UK-listed manufacturer formed by way of the merger of London International Group and Seton Scholl in 1999, is planning to sell its medical division as it struggles to overcome a series of scandals at the company.
SSL’s product range spans footcare including the Scholl shoe brand, healthcare and condom manufacturer Durex. The medical division includes such brands as Regent surgical gloves and Hibi antiseptics and has annual sales in excess of £200m. Following the sale, SSL will focus on its consumer business, which accounts for around 55 per cent of the group’s operations.
“We scrutinised the group's capabilities and opportunities in all its markets and product areas,” said SSL chairman Ian Martin. “Our firm conclusion is that shareholders’ interests would best be served by focusing resources on driving growth in the consumer business where SSL has two major international brands, Durex and Scholl.”
SSL has faced a number of difficult episodes since the 1999 merger, including accountancy scandals and trade-loading. SSL has admitted that its sales were overstated by £22m and profits before tax and exceptionals by £19m in the 1999 and 2000 financial years. The overstatement of results was discovered during the internal investigation into trade loading – the practice of offering big discounts to customers at the end of the financial year to increase sales.
HgCapital is understood to be interested in all or part of the medical division, according to a report in The Times newspaper. The business is also expected to attract trade buyers such as Smith & Nephew and Denmark’s Coloplast. SSL sold its incontinence care business to Coloplast for £80m two years ago.
SSL said it would announce further details of the sale later this month, when it will issue a full trading update for the year ending 31 March 2003. The group’s performance to the end of February was slowed by difficult market conditions, it said, particularly in the US and Italy. SSL sales for the year are now expected to be approximately £620m.
Rothschild has been appointed to oversee the sale, which could net the group as much as £300m. HgCapital was unavailable for comment.