Colgate finalizes Tom's of Maine deal
that will secure an 84 per cent share in Tom's of Maine at a cost
of approximately $100 million.
The agreement was initially penned back in March and since then it has been reviewed by the relevant competition authorities in the United States.
Colgate-Palmolive has made its name in big brand oral care products, so the acquisition of the smaller, naturals-based brand was not seen as representing any threat to this part of the market.
Reuben Mark, Colgate's Chairman and CEO said, "This strategically-important acquisition gives us access to a loyal, emerging consumer group and allows us to accelerate the growth of Tom's of Maine by extending its reach in the U.S. and in Colgate's strong markets outside the U.S."
Currently the US market for natural oral and personal care products, which is the most developed in the world, is valued at $3 billion and is growing at 15 per cent per year.
Tom's of Maine is one of the pioneering producers of natural toothpaste, mouthwash, and deodorant, and is currently claimed to be the number 1 Oral Care Brand in the Natural category.
In recent years growth opportunities in the largely stagnant oral care segment have been hard to come by, forcing key players to segmentalize their category offering with products such as breath-freshening strips, teeth whitening products and oral care chewing gums.
However, with the increasing consumer interest in natural products, this trend is now spilling over to the oral care segment, where natural-based products are driving growth figures well ahead of that for the rest of the industry.
Tom's of Maine was founded in 1970 by Tom and Kate Chappell and the buy-out means that the family will retain a 16 per cent share in the business. The Chappells believe that by combining their company's resources with that of Colgate-Palmolive they will now be able to take the business to 'the next level'.
Obviously the fact that it can now tap into the company's huge research and development facilities as well as its vast marketing machinery will mean that products can now be launched quicker to market and on a far larger scale.
Colgate-Palmolive said that the transaction, which is subject to regulatory approval, will be structured as an all cash acquisition of 84 per cent of the outstanding shares of Tom's of Maine.
The Chappell family will retain a 16 percent ownership interest, with additional share purchase opportunities for Colgate over the coming years.
The company added that the effect on its profits is expected to be neutral in 2006 and increasingly positive each year thereafter.
