* To pay $190 mln cash
* Deal to boost earnings in fiscal 2012
* Prestige in pre-emptive bid; eyes more acquisitions
* Shares up 10 pct at 18-week high (Recasts; adds conference call, analysts, Charlesbank, shares)
By Shobhana Chadha and Nivedita Bhattacharjee
BANGALORE, Sept 20 (Reuters) - Prestige Brands Holdings Inc (PBH.N) said it will buy rival Blacksmith Brands for $190 million in cash, and signalled further deals as it switches from personal care products to a growing over-the-counter drugs market.
"We will continue to focus on execution against our core business and building the brands, and we will also continue to seek additional brand acquisitions that meet the criteria," Prestige CEO Matthew Mannelly said on a call with analysts.
Prestige has been looking to drive growth in its core OTC segment by selling off personal care bands like Cutex nail polish remover and Prell and Denorex shampoos.
"This is likely just the first round of Prestige's use of its strengthened balance sheet and massive free cash flows to grow externally and capture benefits of scale as it does," analyst John San Marco of Janney Capital Markets wrote in a note.
Prestige had $33 million in cash as of end-June.
Irvington, New York-based Prestige Brands shares, which had dropped more than a fifth since disappointing fourth-quarter earnings announced in May, rose as much as 11 percent Monday on the New York Stock Exchange.
The deal gives Prestige ownership of Blacksmith's cough, cold and oral care brands such as PediaCare, Luden's, Efferdent, NasalCrom and Effergrip.
Prestige, which makes healthcare, personal care and household products, said that with these five new brands, OTC products in its portfolio now account for 75 percent of revenue.
Personal care, which accounted for over 11 percent of revenue a year ago, is a negligible revenue earner at present, the company said on the call.
Janney Capital's Marco said the Blacksmith deal would make for a target revenue of around $170 million for Prestige, which had sales of $305 million in the year to March.
Blacksmith is owned by private equity firm Charlesbank Capital Partners LLC.
"The exit of this investment certainly came earlier than we expected ... but Prestige made a pre-emptive bid that hit our return threshold," said Charlesbank Vice President Joshua Klevens.
He did not disclose the premium Prestige was paying, but noted the deal was "consistent with the types of returns achieved historically."
"We typically try to achieve 2-3 times our invested capital," he said.
Prestige, which expects to close the deal on or around Nov. 1, said the overall impact would be slightly dilutive in fiscal 2011 after accounting for a one-time expense of $5 million.
For the deal, expected to boost earnings per share in fiscal 2012, Prestige will acquire tax attributes with a current value of about $16 million, implying an effective purchase price of $174 million.
Sawaya Segalas & Co LLC is advising Prestige. (Reporting by Nivedita Bhattacharjee and Shobhana Chadha in Bangalore, Editing by Ian Geoghegan)