Energizer will buy Edge, Skintimate
Energizer Holdings Inc. moved to bolster its position in the shaving market, announcing plans Monday to buy the Edge and Skintimate shaving cream and gel business for $275 million in cash.
Energizer’s Schick brand controls about 16 percent of the U.S. market for razors and blades, trailing Procter & Gamble Co.’s 68 percent stake. But the Edge and Skintimate brands held more than a third of the market for "shaving preparation" — basically equal to P&G’s Gillette brand, according to Citigroup Global Markets.
The acquired brands, both part of S.C. Johnson & Son Inc., generate an estimated $100 million in sales every year.
"This deal represents a highly complementary fit" for Energizer, Citigroup analyst Wendy Nicholson wrote in a research note. Energizer already owns the Schick-Wilkinson Sword shaving business.
Energizer, based in Town and Country, also announced Monday that it would issue an additional 9.5 million shares of common stock to help pay for the acquisition as well as to repay debt. As of Monday’s close, the stock offering equaled a market value of about $514 million.
If the company is unable to complete the offering by June 1, Energizer may issue shares of non-voting redeemable preferred stock to S.C. Johnson, instead of cash payment for the purchase price. The stock would have a liquidation value of $310 million and semi-annual dividends.
Because Edge and Skintimate compete mostly in North America, Energizer can use its global reach to send the brands overseas and wring more value from the purchase, according to Nicholson’s report faxless payday loan guaranteed.
The acquisition further expands Energizer’s role in personal care products, a sector the company has been steadily expanding over the past six years. Energizer first jumped into that sector in 2003, when it bought the Schick-Wilkinson Sword razor business from Pfizer for $930 million. Four years later, it acquired Playtex Products Inc., the maker of tampons, suntan lotions and other products, in a $1.2 billion deal that more than tripled Energizer’s North American personal care business.
Expanding its product portfolio while using new stock to pay off debt is a smart move for Energizer, Nicholson wrote, because the "primary investor concern hanging over this stock in the last year has in fact been the company’s balance sheet."
Still, Energizer’s share price dropped Monday, perhaps on concern that the new stock would dilute the value of current shares. Bernstein Research estimates that the acquisition and stock offering could trim Energizer’s fiscal 2010 earnings by about 7 percent to 8 percent, Reuters News reported Monday. Energizer’s shares fell as low as $52.12 per share before mostly recovering to finish at $54.06, down $2.42, or 4.3 percent from Friday’s close.
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