UPDATE 3-Energizer to buy SC Johnson shaving cream business
* Energizer to buy Edge and Skintimate for $275 mln
* May pay SC Johnson $310 mln in preferred stock instead
* Energizer shares down about 4 percent (Adds analyst comment, brand rankings, byline, updates stock activity)
By Jessica Wohl
CHICAGO, May 11 (Reuters) - Energizer Holdings Inc (ENR.N) said on Monday that it plans to buy S.C. Johnson & Son Inc's Edge and Skintimate brands for $275 million, adding shaving creams and gels to its Schick-Wilkinson Sword razor business.
Shares of Energizer were down 3.9 percent in afternoon trade as investors reacted to the company's latest acquisition and plans for a new offering of 9.5 million shares.
If the common stock offering were unsuccessful, Energizer said it would give privately held S.C. Johnson $310 million in nonvoting redeemable preferred shares, along with semiannual dividends, instead of the $275 million in cash.
St. Louis-based Energizer, best known for its batteries, is no stranger to using acquisitions to expand into new areas. It got into the razor business when it bought Schick-Wilkinson Sword from Pfizer Inc (PFE.N) in March 2003. More recently, it bought Playtex Products Inc, the maker of tampons, baby care items and suntan lotion, in October 2007.
Energizer's razor business ranks second behind Procter & Gamble Co's (PG.N) Gillette.
P&G is also the leader in the U.S. market for men's pre-shave products such as creams and gels, with a 39.2 percent share, followed by Edge with a 21.5 percent share, according to data from Euromonitor International. In women's pre-shave products, Skintimate leads with a 65.7 percent share, followed by Gillette Satin Care with a 25.6 percent share, according to Euromonitor.
Energizer said it aims to market Edge and Skintimate along with its razors, which include Quattro. Energizer noted in its quarterly report on Monday that the Edge and Skintimate business "has suffered significant market share declines over the past 10 years."
Edge and Skintimate have both seen their share of the market slip in recent years, while others players such as Gillette have gained share, according to Euromonitor data.
The acquisition and share offering could trim Energizer's fiscal 2010 earnings by about 7 percent to 8 percent, Bernstein Research analyst Ali Dibadj said in a note to clients.
Dibadj, who rates Energizer "outperform," called the deal "perhaps an incremental positive" but noted that Energizer's near-term stock performance could be hindered by the dilution of the new shares and the risk of executing the deal.
Energizer said it would use the net proceeds from the offering of 9.5 million shares to pay for the deal and for general corporate purposes, including the repayment of debt.
The offering includes an option for the underwriters to buy up to 1.425 million more shares to cover any overallotments, Energizer said.
Shares of Energizer were down $2.21 at $54.27 after falling as low as $52.13 on the New York Stock Exchange.
Deutsche Bank Securities Inc (DBKGn.DE) was Energizer's financial adviser on the deal with S.C. Johnson. On the stock offering, J.P. Morgan (JPM.N), Merrill Lynch & Co and Deutsche Bank are joint book-running managers, while Moelis & Co LLC acted as financial adviser. (Reporting by Jessica Wohl; Editing by Dave Zimmerman and Gerald E. McCormick)
- Alabama man gets $1,000 in police settlement, his lawyers get $459,000
- Doctor with Ebola in New York hospital after return from Guinea |
- New York police officer critically wounded in hatchet attack
- Exclusive: Charred tanks in Ukraine point to Russian involvement
- Ground offensive against Islamic State months away in Iraq: U.S.