Oral care company buys pharmaceutical division from Coty
Pharmaceuticals, the maker of oral analgesic product brand Orajel,
from global cosmetics and fragrance player Coty.
The transaction is expected to close in July 2008 and an estimated $380m will be paid to Coty by the makers of the well known Arm and Hammer oral care products.
Increasing presence in the oral care category
The acquisition of Del Pharmaceuticals and in particular the Orajel brand, which includes a range of oral analgesic products for adults and teething children, is expected to build Church and Dwight's presence in the premium oral care category.
"Orajel is a great addition to our existing portfolio and provides access to a fast growing segment of the attractive premium oral care category," said Church and Dwight CEO James Craigie.
Furthermore, he added that Orajel is a powerful brand with significant growth potential that has developed good consumer loyalty.
This reflects the company's growth strategy of 'adding number 1 or 2 brands in areas of high growth potential with gross margins that are accretive to the overall company'.
Reaping the benefits in 2009 However, Church and Dwight do not expect the acquisition to benefit company profits immediately due to the integration costs and increased product inventory.
"We expect it to be accretive in 2009 and contribute meaningfully to earnings and free cash flow," said Craigie.
Del Pharmaceuticals is a division of Del Laboratories which was acquired by Coty in December 2007.
The deal added the nail care brand Sally Hansen and the color cosmetics brand N.Y.C Color to the company's portfolio and reflected Coty's strategy to become one of the five largest beauty companies in the world with a turnover of more than $5bn by 2010.
The cosmetics and fragrance company will hold on to the cosmetic brands of Del Laboratories selling off only the pharmaceuticals segment to the oral care manufacturer.
The recent agreement with Church and Dwight will allow the company to concentrate on its industry of choice.
"While these pharmaceutical brands are highly respected, we remain focused on building and strengthening our core beauty business comprised of fragrance, color cosmetics, skin care and toiletries," said Coty CEO Bernd Beetz.
