Prestige Brands Holdings Inc (PBH.N), a marketer and distributor of healthcare and cleaning products, said it would buy Insight Pharmaceuticals Corp and seek further acquisitions to expand its range of feminine care products.
The company, known for its Dramamine motion sickness pills and Comet cleaning products, said the $750 million purchase of Insight was its largest acquisition ever and second in as many weeks.
Prestige's shares rose as much as 17 percent by late morning on the New York Stock Exchange, although trading volumes were lower than average.
The company, which sells female hygiene products under the Massengill brand, said Insight's Monistat yeast infection treatment had a 53 percent market share and would become Prestige's largest brand with annual sales of about $100 million.
Insight, whose investors include Swander Pace Capital and Ontario Teachers' Pension Plan, also sells EPT home pregnancy tests and Uristat urinary health products among others.
Last week Prestige notched up its fifth acquisition in five years when it agreed to buy Hydralyte, an over-the-counter (OTC) oral rehydration brand, from Australia-based Hydration Pharmaceuticals Trust for an undisclosed amount.
Tarrytown, New York-based Prestige said the two acquisitions would boost revenue by 30 percent this fiscal and immediately add to its earnings and free cash flow per share.
The company, whose growth has mainly been powered by acquisitions, bought the Dramamine brand in the United States in January 2011 and a year later purchased 17 North American OTC healthcare brands from GlaxoSmithKline PLC (GSK.L).
Prestige could make other acquisitions in the feminine care category, CEO Matthew Mannelly said on a conference call.
As part of the Insight acquisition, Prestige said it would also get tax attributes valued at about $100 million, giving the deal an effective value of about $650 million.
Prestige, which had cash and equivalents of $94.4 million, as of December 31, said it would fund the deal using cash, a credit agreement and by adding to an existing term loan.
The company said it expects the Hydralyte and Insight deals to boost pro forma earnings to $1.90-$2.00 per share on revenue of about $800 million in its fiscal year started April.
For the year ended March, analysts' on average expect the company to post a profit of $1.50 per share on revenue of $605.2 million, according to Thomson Reuters I/B/E/S.
The company said it expects transaction, integration and acquisition-related expenses of about $25 million.
Prestige, in February, posted lower-than-expected results for the third quarter and cut its profit forecast for the year as retailers reduced inventory due to weak customer traffic and higher competition.
The Insight deal is expected to close in the first half the current fiscal, the company said.
Sawaya Segalas, & Co LLC acted as exclusive financial adviser to Prestige.
Shares of the company were up 15.4 percent at $31.52 in midday trading. Before Friday's gains, the stock had fallen about 24 percent this year.
(Editing by Savio D'Souza)