Church & Dwight Co will acquire Water Pik Inc for $1 billion in cash. Subject to regulatory approval, the transaction is expected to close in the third quarter. Waterpik’s net sales for the 12 months before June 30, 2017, totaled approximately $265 million. About 70% of its net sales were in the water flosser segment, with the remainder in showerheads. International business represents approximately 20% of sales with exports to more than 80 countries.
“Waterpik represents a powerful addition to our existing oral care portfolio, which includes Arm & Hammer toothpaste, Spinbrush battery-operated toothbrushes, and Orajel oral analgesics. The flosser products business is a fast-growing platform and capitalizes on the trends of increased gum disease, oral care awareness across all demographics, and expansion of the middle class in emerging markets,” said Matthew T. Farrell, CEO of Church & Dwight.
Waterpik also saw approximately $80 million in earnings before interest, tax, depreciation, and amortization in the 12 months before June 30, representing a 30% margin. Once the business is fully integrated, Church & Dwight expects to use its distribution network and operating discipline to achieve an estimated $10 million in operating synergies by 2019.
“Waterpik will be our eleventh power brand. The acquisition is consistent with our strategy of acquiring number one or number 2 brands in areas with growth potential,” said Farrell. “It is a strong, growing business with an established history of innovation. The science behind water flossing and water conservation is strong, and Waterpik has an expertise in water jet technology.”
Waterpik is located in Fort Collins, Colo, and Church & Dwight intends to maintain its facility. The acquisition is structured as a stock purchase that Church & Dwight expects to finance with debt. It is expected to be neutral to 2017 earnings per share (EPS), inclusive of transition costs, acquisition-related expenses, interest expense, and intangible amortization expense. Church & Dwight also expects to deliver about 18% EPS growth in 2018.