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As part of an effort to streamline its portfolio, consumer health care giant Haleon is selling its Chapstick lip balm brand to private equity firm Yellow Wood Partners-backed Suave Brands Co. in a deal worth $510 million.

In a Jan. 25 press release announcing the planned acquisition, Haleon, a GSK spinoff that has its U.S. headquarters in Warren, said it expects to receive $430 million in cash, as well as an $80 million stake in Suave.

The deal is expected to close during the second quarter of this year. Following that, Haleon will use the proceeds of the sale to help pay down debt, the company said.

“While ChapStick is a great brand, much loved by consumers around the world, it is not a core focus for Haleon,” Haleon CEO Brian McNamara said in a statement. “Selling the brand allows us to simplify our business and pay down debt more quickly. We’re confident the brand will continue to thrive under its new ownership.”

The company’s other brands include anti-inflammatory drug Advil, Centrum multivitamin, Sensodyne toothpaste, Theraflu cold & flu relief products and Tums antacid.

For Boston-headquartered Yellow Wood, it marks the fifth brand carve-out from a major consumer product goods company in the past four years.

In 2023, Yellow Wood scooped up two of Englewood Cliffs-based Unilever’s non-core units: Suave’s North American business and Elida Beauty, which includes brands like Q-Tips, Caress, VO5, Brut and Tigi.

Following its May purchase of Suave, Yellow Wood created a new standalone business to support the value-oriented beauty and personal care brand under the leadership of Daniel Alter, a 20-year Unilever veteran with global strategy and operations expertise.

“We are excited to add ChapStick, another leading brand with deep equity and history, into our platform,” Alter commented. “At Suave Brands Co., our management team is focused on building a platform of category leading brands that consumers love while working with our retail customers and manufacturing partners to grow the brands. We look forward to continuing to build Suave Brands Co. by identifying additional personal care brands to add to the portfolio.”

Name recognition

Yellow Wood partner Dana Schmaltz said, “ChapStick is the No. 1 lip care brand in the mass, drug, food and convenience store channel and its products are purchased by one out of every five households in the United States.”

“Chapstick has the highest brand awareness in lip care, as well as the strongest purchase conversion among all brands in the category. Similar to Suave, ChapStick will benefit from Suave Brands Co.’s leadership, setting the brand up for continued innovation and growth driven by increased consumer marketing investments, as well as a more focused sales approach,” Schmaltz said.

Invented in the 1880s, ChapStick lip balm is a household name. The product boasts over 80% brand awareness and a position as the No. 1 brand by volume. For the year ending Dec. 31, 2023, it generated about $142 million in revenue, according to Haleon.

Yellow Wood’s existing portfolio includes footcare brand Dr. Scholl’s, self-tanning brand Isle of Paradise, skincare brand Freeman Beauty and beauty brand Real Techniques.

Tad Yanagi, a partner at Yellow Wood, said, “This firm prides itself on having become a trusted partner to CPG companies to carve brands out and set them up for their next stage of growth. We appreciate Haleon’s collaboration on all levels and look forward to working with them to complete the carveout expeditiously.”