Energizer to Buy Playtex

The deal is worth $1.9 billion.
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is moving to diversify its holdings, saying it will buy

Playtex Products

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in a deal worth $1.9 billion, including debt.

The companies signed a definitive agreement that will see Energizer acquire Playtex for $18.30 a share in cash and assume its debt. The offer represents a 26% premium over Playtex's closing stock price on July 10.

Playtex makes skin-, feminine- and infant-care products. Energizer, best known for its batteries and the pink bunny in its ads, is also the parent company of Schick-Wilkinson Sword, the shaving-goods seller.

Shares of Playtex were gaining 15.9% to $17.98 Friday. Energizer was up 1% at $107.80.

"I was little bit surprised that this deal happened," said Jason Gere, an analyst at A.G. Edwards. "Playtex was making acquisitions," referring to the purchase of Hawaiian Tropic in 2006, and "I thought it was still out there looking. Energizer got a very attractive price," he said.

The transaction is consistent with Energizer's strategy of expanding its portfolio, and it doesn't appear to be finished. The press release detailing the acquisition stated that for Energizer, buying Playtex "will also provide a platform of possible additional value-adding acquisitions."

"There isn't a lot of product overlap," notes Kathleen Reed of Stanford Group. Gere agrees, saying "the real opportunity for Playtex is the global infrastructure. For Energizer there really are no similarities, but at the same point it's all about scale."

Energizer will look for Playtex to add $700 million to $800 million in sales, by way of products like Banana Boat sunscreen and several popular infant-care products. Playtex tampons trail only

Procter & Gamble's

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Tampax in terms of market share.

That means Energizer will be doing battle with P&G on another front. Already, its Schick products compete with P&G's Gillette, while its namesake batteries go head-to-head with Duracell, another P&G offering.

Reed places the cost of the deal at nine times adjusted earnings, which is roughly in line with other consumer-goods transactions in recent years.

Energizer says the takeover should add to its earnings in fiscal 2008, but it warned that the first quarter would be affected negatively and that the second quarter could be, as well.

Gere thinks that other deals may be on the horizon and that attention could be turned to


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