Sign In
Free Newsletter
Church Dwight, Kelso Co. to Acquire Del Laboratories
NJBIZ STAFF//August 9, 2005//
Listen to this articlePrinceton”s Church & Dwight (NYSE: CHD), maker of Arm & Hammer brand of baking soda, said Friday it will invest $30 million in DLI Holding, a company formed with Kelso & Co., a private equity group in New York, to acquire Del Laboratories (AMEX: DLI).Church & Dwight”s investment will be substantially in the form of convertible preferred stock, and will represent about 20% of the equity financing. Kelso & Co. will provide the remaining equity, with the participation of Del”s existing management team.DLI Holding is acquiring Uniondale, New York”s Del for $385 million in cash and the assumption of $80 million of debt. Del, which reported 2003 sales of $386 million, operates in two business segments — cosmetics and over-the-counter pharmaceuticals. Del”s major cosmetics brands include Sally Hansen, a leading nail care brand, LaCross nail and beauty implements, and N.Y.C. New York Color cosmetics. The company”s major over-the-counter brand is Orajel, a line of oral care products with 2003 sales of $50 million.As part of the transaction, Church & Dwight will have certain rights with respect to the Orajel brand, including an option to acquire the business after three years. In the event Church & Dwight does not exercise this option, the company will have the right, subject to certain conditions, to convert its preferred stock into a 20% interest in the common stock of the new Del company.Oral care is a core business for Church & Dwight, which markets toothpaste, toothbrushes and oral care gum under the Arm & Hammer, Mentadent, Close-Up, Aim and Pepsodent brand names.In a press release, Robert A. Davies III, chairman of Church & Dwight, said the company”s main interest is in the Orajel brand. “This move gives us a stake in a business that complements our current oral care product line and would, if we exercise our purchase option, add another powerful brand to the Church & Dwight portfolio.”Church & Dwight expects the transaction to close in the fourth quarter, subject to regulatory, financing and other customary conditions. The company also does not expect the transaction to have a material effect on earnings either in 2004 or 2005 calendar years.At the close of trading, Church & Dwight shares were up $0.90 to $45.43.
