Kimberly-Clark Corporation said that its board of directors has authorized management to pursue a spin-off of the company’s health care business that would create a stand-alone, publicly traded health care company with approximately $1.6 billion in annual net sales and leading market positions in both surgical and infection prevention products and medical devices.

“While K-C Health Care has been part of our company since the 1970’s, its strategic fit and growth priorities have changed over time and we now think that pursuing a spin-off makes sense for our shareholders,” says chairman and chief executive Thomas Falk. “This move would allow K-C Health Care to optimize its performance and flexibility to pursue its own value-creation opportunities.  A spin-off would also allow us to further sharpen our focus on our consumer and K-C Professional brands.”

Robert Abernathy, currently Kimberly-Clark Group president – Europe, global nonwovens, and continuous improvement and sustainability, will become CEO of the new health care company if the spin-off ultimately occurs. Abernathy joined K-C in 1982 and has held senior management positions throughout the company, including having overall responsibility for K-C Health Care from 1997 to early 2004. Joanne Bauer will continue as Kimberly-Clark president, global health care, and work closely with Abernathy on separation planning and retire when the spin-off is completed.

Company management will continue to analyze a potential spin-off and expects to make a final recommendation to the board of directors in the next several months. If the board approves a spin-off, a transaction would likely be completed by the end of the third quarter of 2014.

K-C Health Care sells surgical and infection prevention products for the operating room and a portfolio of medical devices focused on pain management, respiratory and digestive health. The business has the number one or number two market position in several product categories in the U.S., including sterilization wrap, face masks, surgical drapes and gowns, closed suction catheters, pain pumps and enteral feeding tubes. Products are sold primarily under the Kimberly-Clark and ON-Q brand names.

K-C Health Care net sales in 2012 were $1.6 billion, with about 70% in North America and most of the rest in Europe and Asia. Total net sales are split approximately 70% surgical and infection prevention products and 30% medical devices. The business had more than 16,000 employees at the end of 2012, with a large majority located in low-cost manufacturing operations in Latin America and Asia.  Business unit headquarters are in Roswell, GA.