Dial Hopes Split Into 2 Will Sweeten the Smell of Success

Dial Corp., maker of the nation’s No. 1 deodorant soap, joined the list of big-business bust-ups Thursday with a restructuring plan that will divide the $3.5-billion diversified company in two.

The plan approved by Phoenix-based Dial’s board will separate its consumer products and service businesses. Each will be publicly traded companies, and no job losses or plant closings are expected, executives said.

It’s the most far-reaching transformation yet in the history of Dial, a formerly bloated conglomerate that started out as the Greyhound bus line during World War I. The company once operated everything from bus factories to money order outlets.

Dial has slimmed down in recent years by shedding its bus operations, financial services and some food businesses. But it has also acquired a number of other companies and remains highly diversified, with some of the leading brands of household products and the biggest airline catering operation in the country.

Dial’s $1.3-billion consumer products business, which will retain the Dial name, is the parent of such household staples as Dial and Tone soap, Purex laundry detergent, Renuzit air freshener, Brillo cleaning pads, Armour Star canned meat and Breck hair-care products.

Dial’s $2.2-billion services company, to be named later this year, includes its airline catering business and a number of travel, vacation and tour operating companies, including Premier Cruise Lines and a majority stake in Greyhound Lines of Canada.

The breakup announcement came as the stock market was about to close. Dial shares rose 25 cents to $32.125 on the New York Stock Exchange.

The company’s decision to split up reflects a broader problem that many diversified businesses have faced with investors, who see the parts as being worth more separately than together. This has helped keep a damper on Dial’s stock price and hampered its financial flexibility.

“Despite our long history of growth, the fact remains that we are perceived as a conglomerate,” said John W. Teets, chairman and chief executive, in explaining the restructuring plan.

Teets said the plan “will help unlock the intrinsic value of Dial and place both companies on an aggressive new growth track.”

Stockholders are expected to receive one share of the consumer products company for each Dial share they own. Both companies will remain headquartered in Phoenix.