×

 

Clorox to acquire Burt's Bees in $925M transaction

RP news wires, Noria Corporation
The Clorox Company, as part of its strategy to grow in and beyond its core in fast-growing, higher-margin consumer-product categories, on October 31 announced it will acquire Burts Bees, a leader in the natural personal care category.

The highly fragmented U.S. natural personal care market represents about $6.4 billion in sales and is currently growing at about 9 percent annually. Founded in 1984, the Burts Bees brand today is regarded among many consumers who purchase natural personal care products as the most natural personal care brand and as the leading natural brand in the U.S. The acquisition of Burts Bees is strongly aligned with Cloroxs Centennial Strategy to pursue growth in areas aligned with consumer megatrends in health and wellness, sustainability, convenience and a more multicultural marketplace.

This acquisition allows us to enter a growing market thats consistent with consumer megatrends, said Clorox chairman and CEO Donald R. Knauss. With this transaction, were entering into a new strategic phase for our company, enabling us to expand further into the natural/sustainable business platform. The Burts Bees brand is well-anchored in sustainability and health and wellness, and we believe it will benefit from natural and 'green' tailwinds. Its in an economically attractive category with a margin structure that will be highly accretive to Clorox. Combined with our new Green Works line of natural cleaning products, and Brita water-filtration products, we can leverage Burts Bees extensive capabilities and credibility to build a robust, higher-growth platform for Clorox.

Beth Springer, Cloroxs executive vice president Strategy & Growth, who will oversee the business, said, Burts Bees is a compelling strategic fit for us, and we believe we can expand on its strong trends over time to build even greater value. Burts Bees has a highly effective strategy and plan, strong trade practices and organizational capabilities, and a robust culture and esprit de corps that we want to leverage and protect. We strongly believe Cloroxs deep capabilities to drive demand creation through consumer communication and value-creating customer capabilities, coupled with Burts Bees strong heritage of innovation to delight consumers, create a right to win. Were delighted Burts Bees president and CEO, John Replogle, will continue to lead the company, which will continue to be based in North Carolina.

Im delighted were entering into this partnership with Clorox and that I will be part of this exciting next step for Burts Bees, said Replogle. The Clorox Company and Burts Bees have complementary values, visions and strengths. Together, I believe Clorox and Burts Bees can help this business realize its full potential.

Burts Bees mission we make people's lives better every day naturally is a terrific complement to Cloroxs mission we make everyday life better, every day, Springer said. Burts Bees values align strongly with Cloroxs and provide a solid foundation for working together and creating synergies between our management teams.

Terms of Deal and Financial Impact
Under the terms of the agreement, Clorox will acquire 100 percent of Burts Bees from its stockholders in a transaction that is structured as a merger. The company is acquiring Burts Bees for $925 million net of an additional $25 million payment for anticipated tax benefits. Clorox will fund the all-cash transaction through a combination of cash and short-term borrowings. The transaction, which is expected to close by the end of this calendar year, is subject to regulatory approval.

Commenting on the transaction, Clorox senior vice president and CFO Dan Heinrich said, Burts Bees is poised to capitalize on expanded distribution within the U.S. and other countries in which the Burts Bees brand is currently marketed. The business is enjoying strong distribution trends. We believe we can add value and expand these trends over time through our strong customer capabilities, while maintaining Burts Bees higher margins. We see potential for expanding the brand into adjacencies, and we believe international expansion may offer significant upside potential beyond our valuation.

Subscribe to Machinery Lubrication

About the Author