Prestige Brands Holdings, Inc.
) shares gained 5.94% immediately after the company announced
that it has signed a purchase agreement with Australia-based The
Hydration Pharmaceuticals Trust of Victoria to acquire their
over-the-counter (OTC) oral rehydration brand, Hydralyte. The
acquisition is slated to close by Jun 2014. Financial details
were not provided.
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With the acquisition of Hydralyte, Prestige Brands expects annual
revenues of its Australian subsidiary, Care Pharmaceuticals, to
double to nearly $50 million (AUD) in fiscal 2015.
This deal marks Prestige Brands' efforts towards strengthening
its OTC portfolio. We note that prior to the Hydralyte deal,
Prestige Brands had made four other similar acquisitions in the
last five years. Last year, the company acquired Care
Pharmaceuticals to boost its OTC healthcare segment.
We remind investors that fiscal 2014 is a transition year for
Prestige Brands and that the company intends to focus on the
growth of its core OTC segment.
The upcoming acquisition of Hydralyte will help Prestige Brands
expand its business in the Austral-Asia region. With Hydralyte's
leading-OTC-brand status in the market for oral rehydration
following diarrhea, vomiting, fever, heat and other ailments in
Australia and New Zealand, the addition of Hydralyte to Prestige
Brands' portfolio will be immediately accretive to its fiscal
Some approved oral rehydration therapies include
) Dioralyte and
Prestige Brands carries a Zacks Rank #4 (Sell). A better-ranked
stock in the health care sector is
Central Garden & Pet Company
) carrying a Zacks Rank #2 (Buy).