Essity Said to Prep for Tissue Exit With Sale, Listing on Table

Essity, a hygiene and health company, has initiated a strategic review of its Consumer Tissue business area, which may lead to its separation from the group. This move aligns with the company's strategy to focus on strong brands and innovation, areas where consumer tissue is less competitive compared to Essity's other segments. The Consumer Tissue segment, which includes brands like Lotus, Tempo, and Zewa, as well as private label products, accounted for $43.5 billion SEK in net sales in 2025, representing 31% of the Group's total net sales. It also contributed 25% of EBITA and 32% of capital employed, with an EBITA margin of 11.9% and ROCE of 14.7% in 2025. The business area employs approximately 13,000 people across 29 production facilities.

Analysts note that a full exit from Consumer Tissue could significantly improve Essity's financial metrics. Pro forma ROCE would jump from 17% to 20-21%, and organic growth would increase from 0.9% to 1.5%. Such a divestment would also reduce Essity's pulp exposure by 80%, thereby significantly lowering margin volatility. The potential proceeds from a transaction could be as high as $30-40 billion SEK, which, if used for deleveraging, could eliminate Essity's debt. The new leverage level, if proceeds were paid to shareholders, would be in line with the current rating, despite an initial increase in net debt to EBITDA from 1.1x to approximately 1.4-1.5x.

The strategic review, announced on May 6, 2026, aims to evaluate different alternatives for the ownership of Consumer Tissue to optimize Essity's product portfolio and maximize value creation. While the exact timing is unclear, the size of the transaction suggests it could extend into 2027 at the earliest. This move is seen as consistent with Essity's history of restructuring, including its separation from SCA in 2017 and the divestment of Vinda in 2024. The current review's implications for bondholders are considered credit neutral in the short term, but could have both positive and negative effects depending on the final structure of the separation.