Embed Size (px)
Citation preview
BOSTON
CHICAGO
LONDON
LOS ANGELES
PHILADELPHIA
SAN DIEGO
SILICON VALLEY
TAMPA
Q3 2014 PERSONAL CARE PRODUCTS & SERVICES
CONTACTS Tracy Patch Vice President (949) 460-6432 [email protected] David Bench Managing Director (949) 460-6431 [email protected] Daniel Schultz Director of Business Development (617) 619-3368 [email protected]
MERGERS & ACQUISITIONS
M&A activity in the personal care industry has again accelerated in 2014. Following a decline in
2013, caused by the capital gains tax rate increase that resulted in unusual fluctuations in M&A
activity, the industry has bounced back strong in 2014. Capstone’s research shows that the
number of transactions in the industry totaled 66 through early September, indicating this year’s
activity could substantially exceed 2013 figures, and return the industry to near-record numbers.
Much of the recent activity is the result of industry players looking to invest in new growth
opportunities, as both leading and niche participants are experiencing significant sales gains and
success in the U.S. personal care market. In particular, smaller middle market companies are
flourishing and, as a result, are increasingly attractive acquisition targets for larger, cash-rich
corporations and private equity groups.
These buyers are continuing to emphasize growth agendas, making significant funding available
for acquisitions. In some cases, this means the buying entity is looking to enter a high-growth
category, such as nail polishes or skin care products for men, where it does not already
participate. In other cases, it means expanding in a current category, often via the acquisition of
leading or niche and innovative brands. Such transactions, where the buyer opts to buy vs. build
out a line, can fast-forward its presence in a particular market or category. With strong demand
for quality targets, a growing number of owners of smaller, privately held personal care
companies are contemplating, developing and/or executing their exits.
Personal Care Industry M&A Transactions
Sources: Capital IQ, Capstone Partners LLC research
YTD 2014 data as of September 3, 2014
70 69
94
73 67
75
85
100
77
66
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD2014
SELECTED DEAL BRIEFS
A review of recent transactions shows a variety of businesses sold in the personal
care industry in recent months. Selected transactions are outlined below, followed
by a more comprehensive list of transactions in the following table.
Kroger acquires Vitacost.com (August 2014) – Kroger, the largest U.S. supermarket
chain with $100 billion in annual sales, purchased the online retailer of vitamin and
other personal care products for approximately $280 million. The acquisition adds a
new market for Kroger to sell nutrition and healthy living products. The transaction
will also enhance Kroger’s technology expertise, providing a channel to fulfill home
delivery and online orders, a growing trend in the industry. Vitacost was founded in
1994 and sells natural and organic foods, beauty products, vitamins, minerals, sports
nutrition and supplements. In 2013, its revenue totaled $382.7 million, but reported
a loss of roughly $13 million, its fourth loss in as many years.
Lion Capital acquires N.V Perricone M.D., Ltd. (June 2014) – As an example of
private equity’s intense interest in the personal care sector, private equity group TSG
Consumer Partners sold its stake in the premium skin care brand Perricone MD to
another private investment firm, Lion Capital. Perricone MD was founded in 1997 by
Dr. Nicholas Perricone, and sells through prestige retailers, online and on QVC. The
brand is recognized for its innovation in the category of science-based skin care and
its product line includes anti-aging topicals and supplements. According to TSG,
during the last three years, product sales and earnings of the company have more
than doubled.
Kosé Corporation acquires Tarte, Inc. (April 2014) – Japanese cosmetics giant Kosé
Corporation acquired New York-based color cosmetics and skin care brand Tarte for
an estimated $135 million. The acquisition is intended to provide Kosé with a new
source of growth outside of Japan, in line with its strategy of “concentrating on
growth drivers”. Previously, Kosé’s operations outside Japan were concentrated in
Asia and the ASEAN region. The company said it is “now starting to increase the pace
of becoming a more global organization” by expanding in new target countries where
it does not yet have a presence. Tarte’s products are based on naturally derived
ingredients and are sold primarily in the US through premium distribution channels,
as well as on its own website and on TV through QVC. Kosé Corporation
manufactures a range of prestige and everyday brands.
Clearview Capital acquires Northwest Cosmetic Laboratories, LLC (April 2014) –
Clearview Capital acquired NCL, a rapidly growing formulator and manufacturer of
cosmetic and skin care products for leading branded cosmetic and personal care
companies. The company’s owner remains a significant investor and active on the
board of directors, and the company continues to be led by its current management
team and CEO. This represents a platform acquisition in the industry for Clearview
Capital, which is planning additional add-on purchases and intends to help NCL reach
the next level while preserving its successful culture. Calvin Neider, Managing
Partner of Clearview Capital, commented that “NCL has many attractive avenues of
growth which we intend to pursue, and we look forward to supporting the Company
as it seeks to expand into new product categories and markets, both organically and
potentially through acquisition.”
Capstone Partners LLC 2
Personal Care Products & Services Q3 2014
Enterprise Value (mm)
EV / LTM
Date Target Acquirer Target Business Description Revenue EBITDA
Sep-14 INSIGHT Pharmaceuticals, LLC
Medtech Products, Inc. Manufactures non-prescription medications and personal care products for common ailments.
$750.0 4.3x -
Aug-14 Elements of Health Care, LLC
KEB Enterprises, LP Manufactures and markets health supplements.
Aug-14 Twinlab Corporation
Employee Buyout Manufactures nutritional supplements including weight management and energy products.
Aug-14 Vitacost.com, Inc. The Kroger Co. (NYSE:KR)
Operates as an online retailer of health and wellness products primarily in North America.
$281.2 0.6x -
Aug-14 Chastain Wellness Studio, LLC
Beauty by Alethea Inc. Provides weight loss, body contouring, facial esthetics and massage services.
- - -
Aug-14 Integrated Electric Systems Corp.
KollagenX Corp. (OTCPK:KGNX)
Manufactures and sells skin care products in the United States and internationally.
- - -
Aug-14 Quanta Aesthetic Lasers USA, LLC
EL.EN. Società per Azioni (BIT:ELN)
Develops laser systems for use in aesthetic and other applications worldwide.
$5.7 0.8x -
Jul-14 Virga Botanicals, LLC 400 Beverly, Inc. Manufactures skincare and body care products. - - -
Jul-14 METAUGUS, INC. Axiom Laboratories, LLC
A contract manufacturer of dietary and nutritional supplements, vitamins and nutraceuticals.
- - -
Jul-14 ME SPA me! Bath Owns and operates a chain of spas. - - -
Jul-14 PreCision Dermatology, Inc.
Valeant Pharmaceuticals Intl. (TSX:VRX)
Develops and manufactures dermatology products and therapeutic and cosmetic skincare solutions.
$500.0 - -
Jul-14 Healthy Directions, LLC Helen of Troy Limited (NasdaqGS:HELE)
Operates as a direct retailer of doctor-formulated nutritional supplements and skincare products.
$195.0 1.3x 8.0x
Jun-14 FDC Vitamins, LLC dba Nutri-Force Nutrition
VS Hercules LLC Produces and distributes vitamins, minerals, herbs and food supplements, including for hair, skin and nails.
$85.0 - -
Jun-14 Kush Inc. Cannabis Sativa, Inc. (OTCBB:CBDS)
Manufactures a line of natural hemp-based skin care products.
$13.2 - -
Jun-14 Coterie Inc. Poshly Inc. Operates an online site for beauty products. - - -
Jun-14 Triad Group, Inc. Medline Industries, Inc. Manufactures disposable and consumable products including personal care products.
$7.1 - -
Jun-14 N.V. Perricone M.D., Ltd.
Lion Capital LLP Provides anti-aging products, anti-inflammatory diets and skin care supplements.
- - -
May-14 RAR Beauty, LLC Joey New York, Inc. (OTCPK:JOEY)
Wholesales and retails natural skin care and beauty products in the United States.
$3.6 - -
Apr-14 DreamTime, Inc. Evriholder Products, LLC
Designs heat therapy, cold therapy and aromatherapy solutions.
- - -
Apr-14 Arctic Beauty Supply Inc.
Beauty Systems Group LLC
Distributes beauty and cosmetics products to the professional market.
- - -
Apr-14 Pharma-Pac, LLC Emilia Cosmetics Ltd. Manufactures and packages pharmaceutical and nutritional, including skincare, products.
- - -
Apr-14 Fontarome Chemical, Inc.
SFM, LLC Produces flavors, fragrances and pharmaceutical ingredients.
$2.6 - -
Personal Care Products & Services Q3 2014
Capstone Partners LLC 3
SELECT RECENT PERSONAL CARE PRODUCTS & SERVICES M&A TRANSACTIONS
Enterprise Value (mm)
EV / LTM
Date Target Acquirer Target Business Description Revenue EBITDA
Apr-14 Alvogen, Inc. Pamplona Capital Management LLP
Manufactures generic pharmaceuticals and OTCs, including cosmetics and personal care products.
- - -
Apr-14 Cedarburg Pharmaceuticals, Inc.
Albany Molecular Research Inc.
Contract manufacturer of pharmaceutical, personal care and dietary supplement ingredients.
$41.0 - -
Apr-14 CornerStone Research & Development
F.H.G. Corporation Manufactures dietary supplements. - - -
Apr-14 P&G, DDF Skincare Business
SA Designer Parfums Limited
Manufactures skin care products, including anti-aging, acne and hyper pigmentation products.
- - -
Apr-14 NuStar Nutritional Manufacturing, LLC
Nutroganics, Inc. (OTCPK:NUTT)
Provides nutritional supplement contract manufacturing services.
- - -
Apr-14 Tarte, Inc. KOSE Corp. (TSE:4922)
Manufactures cosmetics. $135.0 - -
Apr-14 Northwest Cosmetic Laboratories, LLC
Clearview Capital, LLC Contract research, development and manufacture of cosmeceutical & personal care products.
- - -
Mar-14 Oscar de la Renta, Fragrance Division
Inter Parfums USA, LLC Produces and distributes the Oscar de la Renta fragrance collections.
- - -
Mar-14 Arminak & Associates, Inc.
Rieke Corporation Manufactures packaging solutions for cosmetics, personal care, skin & body and hair care markets.
$177.0 - -
Mar-14 CellCeuticals Skin Care, Inc.
Histogen Aesthetics, LLC
Develops skin treatment and cleanser products. - - -
Mar-14 The Bobby Company LLC
Denman International Ltd
Manufactures products for the professional beauty market worldwide.
- - -
Mar-14 PeroxyChem LLC One Equity Partners LLC
Manufactures hydrogen peroxide, peracetic acid and other solutions for cosmetics and other markets.
$200.0 - -
Feb-14 The DeWolf Companies, Inc.
KODA Distribution Group, LLC
Distributes specialty chemicals to personal care, color cosmetics and other markets.
- - -
Feb-14 Miramar Dermatology Adv. Dermatology & Cosmetic Surgery Inc.
Provides dermatology services. - - -
Feb-14 JA Cosmetics Corp. TPG Growth Doing business as e.l.f. Cosmetics, provides cosmetic and makeup products.
- - -
Feb-14 Vogue International, Inc.
The Carlyle Group LP (NasdaqGS:CG)
Manufactures and distributes salon-heritage hair care and other personal care products.
$798.0 - -
Feb-14 Advanced Beauty Systems; Dr. Teals
Parfums de Coeur, Ltd. Manufactures therapeutic and personal care products, including specialty bath, foot care and first aid.
- - -
Feb-14 East Shore Distributors, Inc.
Foreswood Industrial Corporation
Distributes consumer products, including anti-aging creams and hand moisturizers.
- - -
Jan-14 Nucelis Inc. Cibus Global, Ltd. Provides bio-products for use in cosmetics and other products.
- - -
Jan-14 Westside Dermatology PLLC
Advanced Dermatology & Cosmetic Surgery Inc.
Provides medical and cosmetic dermatology services. - - -
Jan-14 Bon Vital Inc. Cramer Products, Inc. Designs, manufactures and markets products for the wellness industry.
- - -
Jan-14 Biozone Pharmaceuticals
Muscle Pharm Corp. (OTCPK:MSLP)
Manufactures OTC drug, cosmetic and beauty products on behalf of third parties.
$17.4 1.4x -
Personal Care Products & Services Q3 2014
Capstone Partners LLC 4
SELECT RECENT PERSONAL CARE PRODUCTS & SERVICES M&A TRANSACTIONS (CONTINUED)
LTM = last twelve months; EV = enterprise value;
Sources: Capstone Partners LLC research; Capital IQ; public filings and press releases
has been acquired by
has been acquired by
has recapitalized with
has been acquired by
has been acquired by
has been acquired by
ANAPHORA, LLC
has secured financing from
has been acquired by
Pierre’s School of Cosmetology
Personal Care Products & Services Q3 2014
Capstone Partners LLC 5
CAPSTONE PARTNERS: COMPLETED PERSONAL CARE PRODUCTS & SERVICES TRANSACTIONS
CAPSTONE PARTNERS: OTHER CONSUMER PRODUCTS & SERVICES TRANSACTIONS
has recapitalized with has been
acquired by has been
acquired by
a portfolio company of
has been acquired by
has been acquired by
has been acquired by
Senior Members of
Doc’s Drugs, Ltd.
strategic joint venture
has been acquired by
a portfolio company of
David Bench, Managing Director [email protected] • (949) 460-6431
David is a Managing Director in charge of the Western Region, based out of Los
Angeles. Prior to Capstone, David managed the Western region for Morgan Stanley
Smith Barney’s Capital Strategies Group and its predecessor, Citi Capital Strategies.
David has focused on middle market investment banking for nearly 30 years and has
been the lead banker in over 250 M&A transactions involving both domestic and
foreign corporate buyers, as well as leveraged recaps with private equity sponsors.
David’s achievements in investment banking have gained national recognition by The
M&A Advisor: one of his transactions was awarded the “Private Equity Deal of the
Year,” while another was recognized as the “Energy Deal of the Year.” Mr. Bench has
also been awarded “Middle Market Financing Professional of the Year,” an award
recognizing M&A’s most accomplished professionals. Mr. Bench holds a BS and an
MBA in Finance from Brigham Young University. He is a Series 7 and 63 Registered
Securities Representative and a Series 24 Registered Securities Principal.
Tracy Patch, Vice President [email protected] • (949) 460-6432
Tracy is a Vice President in the Los Angeles office, supporting the management of the
Western Region. Prior to Capstone, Tracy worked as a senior banking professional in
Morgan Stanley Smith Barney’s Capital Strategies Group and its predecessor, Citi
Capital Strategies. She possesses over ten years of experience in middle market
investment banking, working on both domestic and cross-border transactions. Her
previous finance experience includes working in the hedge fund industry with
Collins/Bay Island Securities LLC and Talisman Capital Partners. Prior to that, Mrs.
Patch worked with institutional fixed income sales at Vining Sparks IBG, LP and
Robert Thomas Securities, Inc. She also was a manager at The Disney Company. Mrs.
Patch holds an MBA from Pepperdine University and a BS in Finance from Miami
University of Ohio. She is a Series 7 and 63 Registered Securities Representative.
Daniel Schultz, Director of Business Development
[email protected] • (617) 619-3368
Dan oversees Capstone’s national business development and industry coverage
activities, working closely with current and prospective clients of the firm on matters
related to corporate sales, recapitalizations, mergers & acquisitions and growth
financings. In his role, Dan is able to deliver specific market intelligence to clients
regarding M&A, financing, strategic, industry and competitive trends. Prior to
spearheading the firm’s business development and market initiatives, he was a Vice
President in Capstone’s M&A group, managing numerous successful transactions
across a variety of industries. Dan also gained hands-on transaction experience as an
investment banker at Headwaters MB. He started his career with Ernst & Young’s
National Professional AABS practice and later worked in Assurance and Advisory
Business Services in the Denver office. Dan received a BE in Biomedical Engineering
with a Business Minor from Vanderbilt University. He earned an MBA and a Master
of Accountancy from the Daniels College of Business at the University of Denver.
Personal Care Products & Services Q3 2014
Capstone Partners LLC 6
THE PERSONAL CARE PRODUCTS & SERVICES TEAM
ABOUT CAPSTONE PARTNERS
Capstone Partners LLC is a premier investment banking firm dedicated to serving
the corporate finance needs of middle market business owners, investors and
creditors. The firm provides corporate sale & divestiture, merger & acquisition,
private placement, corporate restructuring, valuation and financial advisory
services. Capstone maintains various industry specialties including one in the
Personal Care Products & Services industry. The firm also has a merchant banking
capability to actively co-invest in transactions. Headquartered in Boston,
Capstone has offices in Chicago, London, Los Angeles, Philadelphia, San Diego,
Silicon Valley and Tampa.
© 2014 Capstone Partners LLC. All rights reserved.
World Class Wall Street Expertise. Built for the Middle Market.
CAPSTONE’S LEADERSHIP TEAM
NATIONAL
John Ferrara
Founder, President
(617) 619-3325
BOSTON
Jacob Voorhees
Managing Director
(617) 619-3323
CHICAGO
Ted Polk
Managing Director
(312) 674-4531
LOS ANGELES
David Bench
Managing Director
(949) 460-6431
LONDON
John Snead
Managing Director
+44 7979 704302
PHILADELPHIA
Eric Williams
Managing Director
(215) 854-4065
SAN DIEGO & SILICON VALLEY
David Michaels
Managing Director
(858) 926-5950
TAMPA
Tom Elliott
Managing Director
(813) 251-7285
CORPORATE RESTRUCTURING
Brian Davies
Managing Director
(617) 619-3328
For more information
about our expertise,
please visit
www.capstonellc.com
