Church & Dwight to Acquire Avid Health Inc for $650 Million
The acquisition of Avid’s gummy vitamins business represents a great addition to our existing portfolio and brings to our Company a new growth platform in one of the fastest-growing segments of the attractive vitamin / mineral / supplement category.
23 Aug 2012 --- Church & Dwight Co., Inc. has signed a definitive agreement to acquire Avid Health, Inc. (Avid), the leader in gummy form vitamins and supplements, for $650 million in cash. The transaction, which is subject to regulatory approval and other customary conditions, is expected to close early in the fourth quarter.
Avid’s net sales for the trailing twelve months through June 30, 2012 were approximately $230 million. Avid’s major brands are VITAFUSION, the #1 brand in adult gummy form vitamins and L’IL CRITTERS, the #1 brand in children’s gummy form vitamins.
“The acquisition of Avid’s gummy vitamins business represents a great addition to our existing portfolio and brings to our Company a new growth platform in one of the fastest-growing segments of the attractive vitamin / mineral / supplement category. It is also consistent with our strategy of strengthening our business by adding #1 or #2 brands in areas of high growth potential,” said James R. Craigie, Chairman and Chief Executive Officer of the Company.
Avid’s trailing twelve months EBITDA through June 30, 2012 was approximately $58 million. Once Avid is fully integrated, the Company expects to leverage its distribution network, operating discipline, and support functions, to generate anticipated annual cost savings of approximately $15 million in 2014. Avid Health’s manufacturing facilities are based in Vancouver, Washington.
The acquisition is structured as a stock purchase that the Company expects to finance with a combination of debt and cash. The acquisition is expected to be dilutive to 2012 earnings per share (approximately $0.02 per share) and accretive to both earnings and free cash flow in 2013, inclusive of transaction costs, acquisition-related expenses, the effect of an inventory step-up charge and intangible amortization expense.
Mr. Craigie added, “We continue to expect diluted earnings per share for 2012 to be in the range of $2.41 to $2.43, excluding the ($0.02 EPS) dilutive effect of the Avid acquisition. Including Avid, the expected earnings range for 2012 is $2.39 to $2.41.”
“In 2013, we expect earnings per share of $2.73 to $2.78, an increase of approximately 13-15%, driven by our existing business and accretion from the Avid acquisition. We expect to deliver the 13-15% EPS growth while increasing the marketing investment behind the newly-acquired gummy vitamin products and our 8 Power Brands. After 2013, we remain committed to delivering on our long-term total shareholder return target of 10% to 12% annually.
