After 37 Years, Yellow Wood Reunites Dr. Scholl’s

Scholl’s Wellness Company, a portfolio company of Yellow Wood Partners, has agreed to acquire the Scholl footcare brand (Scholl), which operates globally outside of the Americas, from consumer-goods company Reckitt Benckiser. The buy of Scholl will reunite the business with the Dr. Scholl’s brand after 37 years of separate ownership.

Dr. Scholl’s is a footwear and orthopedic footcare brand that was founded by Chicago podiatrist William Mathias Scholl in 1906. The original company expanded globally to design and patent over 1,000 footcare products and was acquired by Schering-Plough in 1979. Schering-Plough was acquired by Merck in 2009, and in 2014 Merck sold its consumer care business, which included Dr. Scholl’s, to Bayer. In November 2019, Yellow Wood formed Scholl’s Wellness Company to acquire Dr. Scholl’s from Bayer for $585 million.

Since its formation, Scholl’s Wellness has been actively expanding its e-commerce capabilities, developing new products, and strengthening its senior management team. Today, Scholl’s Wellness, which had sales of $234 million last year, sells insoles, inserts and a variety of other footcare and treatment products.

“Our experience of successfully executing corporate carve-outs has helped us gain a deep understanding of the many complexities that accompany the separation of an operating subsidiary from a large global parent company,” said Tad Yanagi, a partner at Yellow Wood. “Our previous experience with other global multinational CPG companies enabled us to work directly with Reckitt Benckiser to create this opportunity.”

The Scholl brand became separated in 1984 when Schering-Plough sold the non-North American operations of the business to European Home Products which later, after a series of mergers, became SSL International. Reckitt Benckiser acquired SSL in 2010.

With the close of this transaction, expected in the third quarter of 2021, the once-again combined business will have annual sales of more than $700 million.

“This transaction provides us with a unique opportunity to create a global brand as an undisputed leader in the footcare category. We are excited to reunite these two companies to continue the legacy and heritage of the century-old Dr. Scholl’s brand,” said Dana Schmaltz, a partner at Yellow Wood. “The combined company will have the global resources to continue to develop innovative wellness products with a single vision focused on providing the best footcare products for consumers around the world.”

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.

Reckitt Benckiser (OTC: RBGPF) is a multinational consumer goods company with operations in the hygiene, health and nutrition sectors. Company-owned brands include Clearasil, Lysol, Air Wick, Calgon, Woolite and Vanish among many others. Reckitt Benckiser was founded in 1823 and is headquartered near London in Slough, United Kingdom

Fried Frank provided legal services to Yellow Wood on this transaction. The Fried Frank team was led by corporate partner Dan Oates and included corporate partner Neil Caddy and corporate associates Angela Becker and Hannah Luqmani.

© 2021 Private Equity Professional | February 25, 2021

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