Playtex expands sun care footprint with Hawaiin Tropic acquisition
Florida-based Tiki Hut Holding Company, owner of Hawaiin Tropic sun
care brand, in a move that aims to further expand the company's
fast growing skin care portfolio.
Playtex bought the company for $83m, which will be paid for using a pre-arranged credit agreement, with the ultimate aim being to grow the brand further.
" Hawaiian Tropic is an important addition to our skin care brand portfolio.
It increases the size of our Skin Care segment - which has been growing by double digits - to more than $340 million in annual sales," said Neil DeFeo, CEO of Playtex.
"Further, this acquisition is in line with our acquisition strategy of acquiring products in our core categories that enable us to grow internationally," he added.
Hawaiin Tropic has been built up to become a leading global brand, being particularly well represented throughout Europe and the United States.
It was set up by Ron Rice in 1969 and is known for quality, innovation and by its distinctive brand, which features a palm tree logo.
For nearly 40 years, the company's product portfolio has been developed to include a wide range of sun care products, which now counts products for babies and children, sunless tanning, after sun, burn relief and lip protection, together with a full range of general tanning products.
The company produces the complete portfolio at its production site in Ormond Beach, Florida, where it also manufacturers a number of private label sun care products.
In 2006 production at the site helped drive sales in excess of $110m, 20 per cent of which was derived from sales outside of the US.
Playtex says that once the Hawaiin Tropic business is integrated, it expects to derive annual synergies of approximately 10 per cent of net sales or $11 million.
If also said that it wants to fully synergize the acquisition in fiscal 2009.
This means that Hawaiian Tropic's operating income should approach the operating margin levels of the company's existing skin care business, currently running at 24 per cent.
The company said that the acquisition would contribute moderately to earnings over the first 12 months, taking into consideration the seasonality of the sun care business.
DeFeo also pointed out the acquisition met various criteria, including the fact that it was a strategic fit, will be accretive to earnings in the first year and fits with the company's existing geographic reach.
