Acquisition Market Heating Up As Economy “Stagnates” – C&D's Craigie
This article was originally published in The Tan Sheet
Executive Summary
Church & Dwight CEO Jim Craigie says as the economy continues to "stagnate," a crop of new acquisition opportunities will arise in the consumer packaged goods arena.
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Church & Dwight CEO Jim Craigie says as the economy continues to "stagnate," a crop of new acquisition opportunities will arise in the consumer packaged goods arena. In the current economic climate companies are challenged to deliver "decent" earnings-per-share growth organically, Craigie said May 12 at the Goldman Sachs Consumer Products Symposium in New York. Instead, firms are looking to drive growth by selling under-performing brands or acquiring more promising properties. "You'll see some stuff from big pharma," he said, adding that firms might "start to rationalize their portfolios and some good businesses could fall out of that." Craigie also noted some firms are finding they can focus effectively on either pharma or CPG businesses, but not both. "Big pharma has learned that CPG is a different type of business than theirs and you shouldn't put a big pharma guy running a CPG business, and you shouldn't put a CPG guy running a big pharma business," he said. In a reference to Johnson & Johnson, he added: "I think our neighbor down in New Jersey has learned that the very hard way." Since late 2009, J&J has conducted large-scale recalls of OTCs marketed by its McNeil Consumer Healthcare business due to quality control issues. McNeil's manufacturing currently is operating under a consent decree with FDA that followed the agency's inspections of the firm’s facilities (Also see "Under Consent Decree, J&J Delays Full Return Of Recalled OTCs Until 2012" - Pink Sheet, 25 Apr, 2011.). Also potentially looking to sell brands or businesses are family-owned entities, which may want to exit the market in fear of high tax rates, Craigie suggested. The executive said C&D "loves buying family businesses" and currently is "sitting on a lot of cash" that could go toward a purchase, but only if the brand for sale is No. 1 or No. 2 in its category. "Our plants can handle it, our supply chain can handle it, our marketing and sales teams can handle it," Craigie asserted. C&D's recent acquisitions include the 2010 purchase of the leading U.S. nasal spray brand Simply Saline (Also see "Simply Saline Acquisition Globalizes Church & Dwight's Nasal Hygiene Reach" - Pink Sheet, 17 May, 2010.). |