Yellow Wood Partners Portfolio Company Suave Brands Company Acquires ChapStick from Haleon

Rhea-AI Summary

Yellow Wood Partners announces acquisition of ChapStick brand from Haleon, a global leader in consumer health, by its portfolio company Suave Brands Company. The transaction is set to close in the first half of 2024. Suave Brands Company aims to grow its platform of personal care brands with a more focused management approach and corporate infrastructure. The acquisition of ChapStick is expected to drive synergies across the platform and further expand Suave Brands Company's portfolio.

Insights

Market Research Analyst

The acquisition of ChapStick by Suave Brands Company represents a strategic move to consolidate market share within the personal care sector. The transaction not only diversifies Suave's product portfolio but also enhances its presence in the lip care category, a niche where ChapStick holds a dominant position. With ChapStick's high brand awareness and strong purchase conversion, the acquisition could potentially lead to increased market penetration and revenue growth for Suave Brands Company.

From a market research perspective, this deal could signify a trend towards industry consolidation, where larger entities absorb well-established brands to leverage existing consumer loyalty and streamline operations. The anticipated synergies could result in cost reductions and improved efficiency in distribution and marketing, which are crucial factors in the competitive mass-market retail space.

Financial Analyst

The financial implications of this acquisition are significant, particularly given ChapStick's leadership in the lip care market and its penetration into one out of every five U.S. households. The integration of ChapStick into Suave Brands Company's portfolio is likely to enhance shareholder value through potential revenue and profit increases. It's essential to monitor the post-acquisition performance to assess the accuracy of projected synergies and the actual impact on the bottom line.

Investors should also consider the transaction within the context of Yellow Wood Partners' broader strategy of acquiring consumer brands. The firm's track record of corporate carveouts could indicate a proficient approach to value creation through strategic brand management and operational improvements. The cumulative effect of these acquisitions on Yellow Wood's portfolio performance will be an important metric for stakeholders.

Legal Expert

The completion of the ChapStick acquisition is contingent upon customary closing and regulatory approvals, which are standard prerequisites for such transactions. The legal complexities involved in these processes should not be underestimated, as they involve thorough due diligence and compliance with antitrust laws. The successful navigation of these legal hurdles is critical to avoid delays or impediments to the deal's closure.

Furthermore, the deal's structure will need to address the transfer of intellectual property, including trademarks and patents associated with ChapStick, which are valuable assets given the brand's market position. It's imperative for the legal teams to ensure a smooth transition of these assets to avoid any disruption in market presence and consumer trust.

BOSTON, Jan. 25, 2024 /PRNewswire/ -- Yellow Wood Partners ("Yellow Wood"), a Boston-based private equity firm focused on investing in consumer brands and companies, today announced that its portfolio company Suave Brands Company has signed a binding offer to acquire the ChapStick brand from Haleon (LSE / NYSE: HLN), a global leader in consumer health. The transaction is intended to close in the first half of 2024 upon completion of customary closing and regulatory approvals.

ChapStick invented the lip care category in the 1880s with the launch of a now-iconic lip balm that made ChapStick a household name. For more than a century, ChapStick has added products to its portfolio with innovative new ingredients, skincare benefits, and flavors. Today, ChapStick is the leader in lip care and synonymous with the product category – it is the #1 brand by volume and has over 80% brand awareness.

Suave Brands Company Chief Executive Officer Daniel Alter, said, "The Yellow Wood team established Suave Brands Company in May 2023 to acquire the Suave brand from Unilever. We saw the opportunity to grow Suave with a more focused management approach while also creating the corporate infrastructure to acquire and manage additional personal care brands across multiple categories to drive synergies across the platform. We are excited to add ChapStick, another leading brand with deep equity and history, into our platform.  At Suave Brands Company, our management team is focused on building a platform of category leading brands that consumers love while working with our retail customers and manufacturing partners to grow the brands. We look forward to continuing to build Suave Brands Company by identifying additional personal care brands to add to the portfolio."

Suave is a value-oriented personal care brand that sells products across the hair, body, skin and antiperspirant deodorant segments. Suave was one of the first brands in the 1930s to bring salon-quality hair care to the general public at an accessible price. The Suave brand sells products for women, men and kids across mass retailers, grocery stores, drug retailers, and ecommerce platforms and today is found in one out of every two U.S. households.

Dana Schmaltz, Partner at Yellow Wood Partners, commented, "ChapStick is the #1 lip care brand in the mass, drug, food and convenience store channels. Chapstick products are purchased by one out of every five households in the United States; consumers love the brand. Chapstick has the highest brand awareness in lip care, as well as the strongest purchase conversion among all brands in the category. Similar to Suave, ChapStick will benefit from Suave Brands Company's leadership, setting the brand up for continued innovation and growth driven by increased consumer marketing investments, as well as a more focused sales approach. We look forward to completing this transaction in the first half of 2024."

Tad Yanagi, Partner at Yellow Wood Partners, added, "ChapStick will be Yellow Wood's fifth corporate carveout transaction in the past four years. The firm prides itself on having become a trusted partner to CPG companies to carve brands out and set them up for their next stage of growth. We appreciate Haleon's collaboration on all levels and look forward to working with them to complete the carveout expeditiously."

Yellow Wood's diverse portfolio of consumer brands also includes global footcare brands Dr. Scholl's and Scholl International; Beacon Wellness Brands, led by its anchor brand PlusOne®, the #1 sexual wellness device brand; beauty brands Real Techniques and EcoTools; skincare brand Byoma, and self-tanning brands Isle of Paradise, Tanologist and TanLuxe. In December, Yellow Wood announced the pending acquisition of the Elida Beauty portfolio of brands from Unilever. This platform includes leading brands such as Q-Tips, Caress, TiGi, Ponds, St. Ives, and Noxzema, as well as European brands including Brut, Impulse, Monsavon, and Timotei. This transaction is scheduled to be consummated in 2024.

About ChapStick
ChapStick, the expert lip care brand, makes it a priority to help people care for their lips all year round. Originally created in the early 1880s, ChapStick is known today as America's favorite lip balm. ChapStick offers a variety of products and fun flavors that promote happier and healthier lips. For more information, please visit www.chapstick.com.

About Suave Brands Company
Suave Brands Company was founded in 2023, when Yellow Wood Partners acquired the Suave brand from Unilever and established it as a standalone independent company. A platform was formed around Suave to acquire and accelerate innovation and focus the growth of affordably priced personal care brands. For more information, please visit www.suave.com.

About Yellow Wood Partners
Yellow Wood Partners is a Boston-based private investment firm that invests exclusively in the consumer industry in the middle market. The firm seeks to acquire branded consumer products that sell into a variety of consumer channels, including mass, drug, food, specialty, value, club, and e-commerce. Yellow Wood's Consumer Operating DNA investment and operating strategy is based on utilizing the firm's functional operating resources to help maximize brand performance by driving organic growth and increasing operating efficiencies. The firm seeks to acquire additional brands to create new platform investments and accelerate growth in its limited number of platform portfolio companies. For more information, please visit www.yellowwoodpartners.com.

About Haleon
Haleon (LSE / NYSE: HLN) is a global leader in consumer health, with a purpose to deliver better everyday health with humanity. Haleon's product portfolio spans five major categories - Oral Health, Pain Relief, Respiratory Health, Digestive Health and Other, and Vitamins, Minerals and Supplements (VMS). Its long-standing brands - such as Advil, Sensodyne, Panadol, Voltaren, Theraflu, Otrivin, Polident, parodontax and Centrum - are built on trusted science, innovation and deep human understanding. For more information, please visit www.haleon.com.

Contact: Chris Tofalli
Chris Tofalli Public Relations, LLC
chris@tofallipr.com
914-834-4334

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SOURCE Yellow Wood Partners

FAQ

When will the acquisition of ChapStick by Suave Brands Company be completed?

The acquisition is intended to close in the first half of 2024 upon completion of customary closing and regulatory approvals.

What is the current market position of ChapStick in the lip care category?

ChapStick is the leader in lip care and synonymous with the product category. It is the #1 brand by volume and has over 80% brand awareness.

What other brands are part of Yellow Wood Partners' diverse portfolio?

Yellow Wood's diverse portfolio of consumer brands includes Dr. Scholl's, Scholl International, PlusOne®, Real Techniques, EcoTools, Byoma, Isle of Paradise, Tanologist, TanLuxe, Q-Tips, Caress, TiGi, Ponds, St. Ives, Noxzema, Brut, Impulse, Monsavon, and Timotei.