Church & Dwight (NYSE:CHD) has agreed to acquire the Hero Mighty Patch brand (Hero) and other acne treatment products for $630M, consisting of cash and Church & Dwight restricted stock.
The transaction, which is subject to customary closing conditions, is expected to close in the fourth quarter.
Hero’s net sales were ~$115M and EBITDA was ~$45M in the trailing twelve months through June 30, 2022. In 2023, the business is estimated to generate net sales of $150M (+15%).
Church & Dwight (CHD) expects to expand Mighty Patch’s limited distribution by leveraging its U.S. retailer relationships and international footprint. It will continue to maintain Hero’s New York location and retain its employees.
The acquisition is expected to be dilutive to Church & Dwight’s (CHD) 2022 EPS by ($0.05). The company now projects adj. EPS of $2.97 for the year vs. consensus of $3.02.
Full year 2022 sales growth is expected in the range of 2% to 4% (previously 4% to 5%), reflecting the incremental growth from Hero offset by continued softness across CHD’s more discretionary brands.
For 2023, the acquisition is expected to be 3% accretive to cash earnings and neutral to adjusted 2023 EPS.
CHD shares are down 1.40% pre-market
Image and article originally from seekingalpha.com. Read the original article here.