* Second acquisition for Henkel this week
* Henkel says more deals possible
* Both deals expand position in existing categories, markets
(Adds details on BC Partners, background, context, byline)
By Victoria Bryan and Martinne Geller
FRANKFURT/LONDON, June 5 Henkel & Co
plans to buy French household cleaner maker Spotless, for 940
million euros ($1.28 billion) cash, its second purchase in a
week as the German consumer goods company builds its presence in
large, profitable, mature markets.
Henkel is buying Spotless from London-based private equity
firm BC Partners, adding Eau Ecarlate and Dylon laundry products
to a portfolio that already includes Persil detergent, Loctite
adhesives and Schwarzkopf hair products.
Spotless will give it leading positions in established
markets like France, Italy and Britain where home and personal
care products enjoy relatively fat profit margins, Henkel said.
The global consumer goods sector is seeing a spate of deals
as tough economic conditions are leading small and mid-sized
firms to seek entry into new markets or greater scale in
existing, mature markets.
Henkel's latest acquisition follows a 270 million euros
($367.78 million) deal on Monday, to buy three U.S. hair care
brands. Both purchases are being funded by a 4 billion euro
($5.45 billion) war chest the company has been building over
several quarters for acquisitions.
Henkel had been shopping for takeover targets for well over
a year as a way to stay competitive in a consolidating consumer
goods market increasingly fuelled by emerging markets. By 2016
it aims to have 20 billion euros in sales, up from 16.4 billion
in 2013, with half of that coming from emerging markets.
The price paid for Spotless, which includes debt, represents
a multiple of 3.4 times sales and 12.1 times earnings before
interest, tax, depreciation and amortization (EBITDA). That is
higher than the 10 times sales and 1.7 times EBITDA Unilever
paid in 2010 for laundry and personal care brands from
Sara Lee. Henkel itself trades for about 13.5 times EBITDA and
has a market value of about $47 billion.
"The acquisition seems to be rather expensive, but high
valuation is justified, due to low volatility business profile
and the emerging opportunity to increase market share in the
highly competitive Western European laundry market," wrote
Equinet Bank analysts in a research note.
According to Euromonitor International, the deal would
slightly lift Henkel's share of the $82 billion global laundry
care market to 8.7 percent, still well behind Procter & Gamble's
26.6 percent and Unilever's 14.8 percent. Unilever sells
Persil detergent in some markets.
Consumer giants like Unilever, Nestle and Procter
& Gamble are also taking advantage of high valuations to prune
their portfolios and sharpen their focus on their most
Recent weeks have seen a bidding war for U.S. sausage maker
Hillshire Brands, Japan's Mizkan Group buying Unilever's
Ragu pasta sauce, Mars Inc buying P&G's pet food unit, L'Oreal
buying Chinese beauty mask maker Magic Holdings, and
Emperador from the Philippines buying the Whyte & Mackay Scotch
whisky business from United Spirits, controlled by
Despite Henkel's deals this week, there could still be more,
said a spokesman for the company, which pre-empted an auction
for Spotless with an offer, according to a source close to the
BC Partners made a return of 2 times its original
investment, according to the source. BC bought Spotless from
Ardian, formerly Axa Private Equity, in 2010 for 640 million
euros including debt. It has not taken any dividends from its
investment, said the source.
The deal is subject to approval by antitrust authorities
and is expected to be completed in the first quarter of 2015.
Henkel said it would add to earnings immediately.
Henkel's shares were up 0.5 percent at 85.69 euros at 0937
GMT, valuing the company at about $47 billion.
BC Partners was advised by JP Morgan and Rothschild on the
($1 = 0.7341 Euros)
(Additional reporting by Freya Berry in London and Matthias
Inverardi in Dusseldorf; Editing by Matt Driskill and Elaine