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Executive Summary

COLGATE PERSONAL CARE ACQUISITION INTERESTS could be fueled by planned divestitures and a share repurchase program, the company indicated in a July 31 press release. The release announced the company is ready to sell parts or all of three business groups -which Colgate estimates will bring in $260 mil. in after-tax proceeds. The firm simultaneously stated its intention to buy back up to 18% of its outstanding shares. "We will redefine our strategic direction by the sale of certain operations which do not fit into our long-term strategy," Colgate President Reuben Mark said. The divestiture candidates are: Bike Athletic and Etonic athletic shoes, clothing and equipment subsidiaries; Riviana Foods (except for Hills Pet Food) and "elements" of the Kendall Co., including its MedaSonics subsidiary, its textile woven fabrics division and portions of its non-health care operations. MedaSonics is primarily a producer of blood flow monitors. Colgate acquired the firm through Kendall in 1978. Colgate commenced a tender offer on Aug. 1 for as much as 12 mil. shares of its common stock at $29.50 each, totaling $354 mil. The firm said it may subsequently decide to purchase up to an additional 3 mil. shares, which would bring the value of the transaction to $442.5 mil. As of June 30, the company had 83 mil. shares outstanding. Lazard Freres and Goldman Sachs are dealer/managers for the offer. Colgate has arranged a $500 mil. line of credit to cover the tender offer. Proceeds from the divestitures will go toward repaying what is borrowed, a company spokesman explained. The company's long-term debt at the end of 1984 was $282.4 mil., according to Colgate's annual report for the year. The divestiture/repurchase program will put Colgate into a stronger position to afford and manage new acquisitions. A likely area for expansion is in the personal care products field. The Personal Care/Household Products group dominates Colgate's sales and operating profits. The segment comprised 68.6%, or $3.4 bil., of corporate sales in 1984. Oral products alone accounted for 15% ($736.5 mil.l of worldwide volume last year. Colgate is pumped up for a personal care move. Propelled by its toothpaste in a pump, total U.S. market share for the Colgate brand moved to its highest level in over ten years by the end of 1984, representing a gain of nearly 10 points over the average 1980 share level, according to Colgate. The firm currently shares the leadership position in the U.S. market with Procter & Gamble, each holding more than 30%, a spokesperson said. * One personal care area in which a recent Colgate effort failed is the U.S. shampoo market. Colgate has virtually no domestic shampoo presence since it pulled Splendor from test market in late 1984/early 1985. Splendor was the product of a joint venture between Colgate and Kao Soaps of Japan. The shampoo began testing the summer of 1983. Overseas, Colgate is among the leading shampoo marketers with brands like Palomlive and Halo, the firm said. COLGATE's DIVESTITURE LIST Announced by Colgate President and CEO Reuben Mark in a July 31 press release. "We will refine our strategic direction by the sale of certain operations which do not fit into our long-term strategy, consisting of the following: (1) The Bike Athletic and Etonic subsidiaries, which produce athletic shoes, athletic clothing and equipment. (2)Riviana Foods, except for the Hills Pet Food subsidiary, which we will retain. (3) Elements of the Kendall Co., including its MedaSonics subsidiary, its textile woven fabrics division, and portions of its non-health care operations."

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