Yellow Wood Partners has agreed to buy the Dr. Scholl’s business from Bayer for a purchase price of $585 million.
Dr. Scholl’s is a footwear and orthopedic footcare brand that was founded by Podiatrist William Mathias Scholl in 1906 in Chicago. The original company expanded globally to design and patent over 1,000 footcare products and was acquired by Schering-Plough in 1968. Schering-Plough was acquired by Merck in 2009, and in 2014 Merck sold its consumer care business, which included Dr. Scholl’s, to Bayer.
Today, Dr. Scholl’s, which had sales of $234 million last year, sells insoles, inserts and a variety of other footcare and treatment products (www.drscholls.com).
“The Yellow Wood team is excited to become the next steward of the iconic Dr. Scholl’s brand,” said Dana Schmaltz, a partner at Yellow Wood. “Dr. Scholl’s is the leading brand in the footcare category, and we see great potential to grow the brand in its existing and other sales channels. The brand fits extremely well into the Yellow Wood consumer-focused business model as our firm has the operating experience from other carve-out investments to work with the Bayer employees who are continuing with the brand to build an exciting new stand-alone platform company.”
Yellow Wood invests in consumer brands and companies that operate in the mass, drug, food, specialty, value, club and e-commerce channels and have revenues between $30 million and $200 million. In July 2017, the firm completed fundraising for Yellow Wood Capital Partners II LP at an oversubscribed $370 million of committed capital. Yellow Wood was founded in 2011 and is based in Boston (www.yellowwoodpartners.com).
Through this transaction, Yellow Wood will acquire the product rights to Dr. Scholl’s in the Americas and take over approximately 30 brand personnel in the United States and Canada.
The sale of Dr. Scholl’s is part of an effort by Bayer to focus on building its core over-the-counter brands. In May, Bayer agreed to sell its US sun care brand Coppertone to Hamburg, Germany-based Beiersdorf AG for $550 million.
“We believe that we have found the right partner in Yellow Wood Partners to continue to invest in and grow the Dr. Scholl’s brand,” said Heiko Schipper, member of Bayer’s Board of Management and President of Consumer Health. “Since Bayer took ownership of Dr. Scholl’s in late 2014, we have made progress in revitalizing the brand and developing an exciting pipeline of innovative products. We look forward to seeing the brand taken to the next level of success under Yellow Wood’s ownership.”
Bayer is a multinational pharmaceutical and life sciences company and one of the largest pharmaceutical companies in the world. Recently, the performance of Bayer’s stock has been negatively impacted by lawsuits over an alleged cancer-causing effect of its Roundup weed killer. The company is headquartered in Leverkusen, Germany (www.bayer.com).
Citi and Sawaya Partners were the financial advisors to Bayer.
This transaction is expected to close in the fourth quarter.
© 2019 Private Equity Professional | July 23, 2019
