Yellow Wood Closes Dr. Scholl’s Buy from Bayer

Yellow Wood Partners has formed Scholl’s Wellness Company to purchase the Dr. Scholl’s business from Bayer for $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.

With the closing of this transaction, Yellow Wood has named Craig Stevenson as the CEO of Scholl’s Wellness. Mr. Stevenson has more than 30-years of experience in the consumer-package goods industry with Clorox (1994 to 2018), most recently as vice president and general manager of Renew Life and Burt’s Bees, and with Proctor & Gamble (1988 to 1994).

“The Scholl’s Wellness team is excited to partner with Yellow Wood to become the next steward of the iconic Dr. Scholl’s brand,” said Mr. Stevenson. “We see tremendous opportunity to grow the brand with the more focused attention and dedicated resources within a standalone company.   We plan to invest in all aspects of the business to drive growth and profitability to deliver value for all stakeholders.”

“Completion of this complex carve-out of Dr. Scholl’s is the culmination of months of hard work and I’m thrilled that we can now begin an exciting new chapter of growth and development with the creation of Scholl’s Wellness Company,” said Dana Schmaltz, a partner at Yellow Wood.  “We are excited to be building a world-class team at Scholl’s Wellness, and we look forward to working with Craig and the new management team.  He brings significant leadership expertise having led several business units at Clorox, with his most recent position managing a portfolio of brands that included Global Burt’s Bees personal care and the Renew Life Probiotics business.”

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.

“The Dr. Scholl’s brand fits extremely well with the Yellow Wood consumer-focused business model where we bring our operational and financial resources to build a limited number of platform companies,” said Tad Yanagi, a partner at Yellow Wood. “We believe there is significant opportunity to build Scholl’s Wellness into a broader wellness business through both organic growth and additional acquisitions.”

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.

© 2019 Private Equity Professional | November 4, 2019

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