The Arm & Hammer manufacturer expands into a strong segment with its purchase of Avid Health Inc., a maker of vitamins and supplements.
The Arm & Hammer brand manufacturer, based in Princeton, announced Monday that it would buy Avid Health Inc. for $650 million. The firm said the integration of the Vancouver, Wash.-based company would save it millions of dollars in 2014, a goal that observers said was a key piece of the deal.
“Distribution gains are sort of reoccurring benefits,” said William Keep, dean of The College of New Jersey School of Business. A firm can reap those savings annually, he said, “so that kind of operational synergy has a strong appeal, particularly in the consumer products industry.”
Keep also said Church & Dwight invested wisely by expanding into a growth industry: While consumers may cut their discretionary spending during a weak economy, “vitamins and supplements will be considered part of their necessary purchases.”
The deal comes as the manufacturer prepares to move into a new 250,000-square-foot corporate headquarters in Ewing, while making investments at its Lakewood plant. The firm, which considered leaving New Jersey, announced the plans in October after the state awarded it a $13.5 million incentive grant to stay.
Ethné Swartz, a Fairleigh Dickinson University business professor, said Church & Dwight’s new acquisition was not surprising for a company that has a penchant for strategy, especially under Chairman and CEO James R. Craigie. She said it was essential for such a firm to expand, “otherwise they’ll get squeezed out.”
“I think that’s something that the company really excels at,” Swartz said. “They find really good niches, and they’re trying here to leverage very high-value health care.”
The deal is also a positive sign for large companies in New Jersey, Keep said. Firms have been tentative to expand in recent years, but the move “certainly signifies that they’re out looking.”
“We’ve known for a while that companies have been holding onto cash reserves and other assets during a period of time of relatively low mergers and acquisitions,” he said. “It’s encouraging to see a strong company now looking to go into that acquisition area and invest.”