Prestige Brands Holdings (PBH) - Get Report struck a deal to acquire C.B. Fleet, the marketer of well-known feminine care and other over-the-counter healthcare products, from PE firm Gryphon Investors for $825 million in cash.
The companies announced the deal late Thursday. Prestige shares were down Thursday, dropping 46 cents, to $48.74 from $49.20.
Fleet's products include Summer's Eve and add to Prestige current women's healthcare lineup, anchored by the Monistat brand.
Fleet's products also include major products in the women's health, gastrointestinal and pediatric care categories, such as Pedia-Lax, the leading children's laxative and Fleet enemas and glycerin suppositories.
Prestige said it expects the acquisition to result in pro forma revenues of approximately $1 billion in fiscal 2018.
The acquisition also includes Fleet's manufacturing facility in Lynchburg, Va., which produces two-thirds of Fleet's sales. Prestige products are expected to be made there too eventually.
In addition to North America, Fleet has a presence in Asia Pacific and Latin America.
Gryphon and other institutional co-investors and management originally invested in Fleet in October 2014.
The transaction is expected to be immediately accretive to earnings per share and cash flow from operations, exclusive of transaction, integration and purchase accounting items.
Ron Lombardi, CEO of Prestige, said Summer's Eve will become his company's largest brand, with over $125 million in sales. "In addition, the transaction adds the leading brands of Fleet and Pedia-Lax to our gastrointestinal category, expanding the brands we offer in this category," he said.
The Federal Trade Commission will have to approve the transaction and may require some overlapping brands divested.
"The acquisition is also a key step in aligning our portfolio with our long-term stated goal of 2-3% organic growth," he said. "We believe the addition of Fleet's manufacturing facility also provides strategic benefits and cost synergies as we look to expand manufacturing to include current Prestige products."
"This acquisition is consistent with our proven M&A strategy that focuses on acquiring brands with long term brand building opportunities, including new products and innovations and quickly integrating them into the Prestige business, resulting in meaningful synergies and cost savings," Lombardi said.
Prestige said it intends to close the transaction by the end of its fiscal fourth quarter of 2017.
The purchase price is approximately 11 times anticipated fiscal 2018 pro forma adjusted Ebitda.
Barclays acted as exclusive financial adviser to Prestige Brands.
Sawaya Segalas & Co., LLC acted as a financial adviser to Fleet and Gryphon, and Kirkland & Ellis LLP served as Gryphon's counsel on the transaction.
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