* 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
By Jessica Wohl
CHICAGO, May 11 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
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,
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)