Energizer Holdings Inc., famous for their Energizer flashlight and batteries and their Energizer bunny is to buy Playtex Products Inc. for $1.16 billion as the company expands its portfolio of personal care products. But why?
After the news came out, Playtex shares rose 15.8% and Energizer's shares rose almost 1%.The deal will cost Energizer $18.30 a share for Playtex Products Inc., which is a 18% premium over Playtex's closing stock price yesterday.
Playtex makes feminine care products that make up 35% of their revenues. And so the news really gave me a WTF? as it did with some analysts. Back in 2003, the same WTF came when Energizer took over Schick-Wilkinson Sword, the world's second-largest maker of wet shave products. Well at least with shaving products > shavers > batteries, you can still forcefully make sense out of it. And in terms of money, it did. Schick's annual sales back in 2003 was only about $625 million, and in less than four full years, revenues have added nearly another $1 billion to the company.
Hopefully Playtex can do the same.
I guess the WTF factor can be toned down after you think about it some more. Considering how much business flashlights and batteries can give you, maybe it does makes sense to start diversifying to other household products.
Energizer will be taking up an undisclosed amount of debt, which will cover the acquisition. With Energizer on the roll, more acquisitions may be coming ahead as the company continues to grow. The deal is expected to close by the end of this year.