Colgate To Buy Hello Brand, Expand Natural Products Line
Zacks Investment Research | Jan 23, 2020 09:17PM ET
Colgate-Palmolive Company (NYSE:CL) has agreed to acquire Hello Products LLC, a leading oral care brand in the United States that produces eco-friendly and organic products. Hello’s products include adult and kids toothpaste, mouth rinse, toothbrushes and floss. The brand’s products, which have a distinct position in the market, are extremely popular with young consumers and across the broader segment. Further, the brand fully complements the company’s Tom’s of Maine and Colgate brands.
Colgate plans to finance the deal with a combination of cash and debt. The company anticipates closing the transaction by February 2020. Following the completion of the acquisition, Hello’s founder Craig Dubitsky and CEO Lauri Kien Kotcher will continue to lead the brand.
The company expects the acquisition to be flat to a penny dilutive to 2020 earnings per share, after including transaction costs. The terms of the deal were not disclosed.
Colgate is on track with product innovation and in-store implementation, which have been key aspects of its growth strategies for years. The company’s innovation strategy is focused on growing adjacent categories and product segments.
Further, it remains focused on the premiumization of its Oral Care portfolio through major innovation. The company has a solid innovation pipeline in the next few quarters, which includes the launch of Optic White. Additionally, it continues to expand Naturals toothpaste and prescription diet. In fact, the Naturals range is a key area of focus for the company in personal and home care categories.
Also, Colgate continues to expand portfolio by introducing pharmacy brands like elmex and meridol to newer markets. It is impressed with the performance of its professional skincare businesses — Elta MD and PCA Skin — in spas and dermatologists. In addition, the company is on track to expand the premium skincare portfolio with the buyout of the Filorga skincare business. It is also expanding product availability through the e-commerce channel.
We note that, shares of this Zacks Rank #2 (Buy) company have gained 3.2% in the past three months, compared with the Zacks Investment Research
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