Colgate-Palmolive Enters New Channel with Tom's of Maine Acquisition

Mar 21, 2006 | Contact Author | By: Rachel Chapman
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Title: Colgate-Palmolive Enters New Channel with Tom's of Maine Acquisition
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Colgate-Palmolive Company announced that as part of its strategy to focus on its higher-margin oral and personal care businesses, it has agreed to purchase Tom's of Maine, a leader in the fast-growing naturals market in the United States. The U.S. market for natural oral and personal care product is valued at US$3 billion and is growing at 15 percent per year, said the copmany.

Tom's of Maine, founded in 1970 by Tom and Kate Chappell, pioneered natural toothpaste, mouthwash and deodorant and reportedly is the number one oral care brand in the natural category. The acquisition will give Colgate the opportunity to enter the fast-growing health and specialty trade channel where Tom's toothpaste is a market leader, commanding 60% share of that channel.

Reuben Mark, Colgate's chairman and chief executive officer (CEO), said in a press statement, "The combination of Colgate, the global leader in oral care, and Tom's of Maine, the leader in the naturals category, is an exciting partnership with growth opportunities for both companies and we're especially pleased that Tom Chappell will remain on to lead the company, which will continue to be based in Kennebunk, Maine."

Ian Cook, Colgate's president and chief operating officer (COO), said: "This acquisition allows Colgate to strongly enter a completely new channel of distribution and establishes us as the only global oral care company in that channel. This bodes well for additional opportunities in other high margin categories such as personal care. Further, our truly global reach will help speed the growth of the naturals health and specialty business outside the United States. With gross profit margins a full ten percentage points higher than Colgate's margin, Tom's of Maine is a logical acquisition as we continue to prioritize our global oral and personal care categories."

The transaction will be structured as an all cash acquisition of 84 percent of the outstanding shares of Tom's of Maine for an aggregate price of approximately US$100 million, subject to adjustment at closing, which is expected in the second quarter of this year.