Church & Dwight To Acquire FLAWLESS Brand For $475 Mln Plus Earn-out
(RTTNews) - Church & Dwight Co., Inc. (CHD) agreed Thursday to acquire the FLAWLESS and FINISHING TOUCH brands of hair removal products from Ideavillage Products Corp. for about $475 million in cash plus an additional earn-out payment of up to a maximum of $425 million, in cash, based on a twelve-month net sales target ending no later than December 31, 2021.
The two brands are the leading women's electric hair removal brands in the U.S. focusing on brows and face while the women's hair removal category has historically been focused on legs with manual razors and blade products. The products are marketed in the U.S. and over 30 countries. Approximately 10 percent of net sales come from international markets.
The brands represent a powerful addition to Church & Dwight's specialty haircare portfolio which includes BATISTE dry shampoo, VIVISCAL hair thinning supplements, and TOPPIK hair fibers.
The transaction, which is subject to regulatory approval and other customary conditions, is expected to close in the second quarter of 2019.
The acquisition will be financed at closing with debt and is expected to be neutral to 2019 reported earnings per share, net of transition costs.
During the short-term, the Company does not expect material synergies as a multi-year service agreement is in place. The Company will purchase the inventory following a transition period which is expected to be completed by end of 2019.
In 2019, Church & Dwight continues to expect approximately 7 to 9 percent adjusted earnings growth driven by approximately 7 to 9 percent earnings growth of its existing business, plus 1 percent accretion from the brands' acquisition inclusive of interest expense and intangible amortization, less 1 percent one-time transition costs. The acquisition is expected to increase 2019 cash earnings by 4 percent.
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