Yellow Wood Closes Buy of Scholl

Scholl’s Wellness Company, a portfolio company of Yellow Wood Partners, has closed its acquisition of the Scholl footcare brand, which operates globally outside of the Americas, from consumer-goods company Reckitt Benckiser.

The buy of Scholl reunites the business with the Dr. Scholl’s brand after 37 years of separate ownership. With the close of this acquisition, the once-again combined business will have annual sales of more than $700 million.

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.

“As part of Yellow Wood’s ‘preparation to meet opportunity,’ we began speaking with Reckitt upon completion of the Dr. Scholl’s transaction in 2019 and subsequently entered into exclusive negotiations to combine the businesses,” said Dana Schmaltz, a partner of Yellow Wood. “We are very excited to reunite the global Scholl brand after more than 30 years as separate operating businesses.”

Since its formation by Yellow Wood, Scholl’s Wellness has been actively expanding its e-commerce capabilities with Target, Walmart, and Amazon; 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.

The Scholl brand became separated from Dr. Scholl’s 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.

Today, the Dr. Scholl’s brand is a category leader at major bricks and mortar and e-commerce retailers in the U.S. Similarly, the Scholl brand is a category leader in various regions such as France, Italy, Germany, the U.K., Australia and other markets outside of North America with strong penetration at both major retailers and independent pharmacies across Europe. In addition to its footcare products, the Scholl brand includes skincare products, insoles, and treatments for certain foot conditions.

“At Yellow Wood, we invest the time and capital in data analytics to understand consumers and consumption patterns in order to acquire companies that provide affordable luxury and immediate efficacy,” said Tad Yanagi, a partner at Yellow Wood. “Since the successful creation of a standalone Dr. Scholl’s business in a carve-out from Bayer in 2019, the business has performed remarkably well.  We have worked to make the brand more relevant with younger consumers, with the successful acceleration of new product launches and significant investments in advertising which has increased the brand’s connection with consumers across digital and social media platforms.”

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.

“Scholl’s Wellness has substantial growth opportunities, including bringing already formulated Scholl footcare products to the America’s from Europe and continuing to build the e-commerce business,” added Mr. Schmaltz. “This acquisition is another successful Yellow Wood carve-out from a large international consumer packaged goods company.”

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

Spayne Lindsay & Co. and Sawaya Partners were the financial advisors on this transaction.

© 2021 Private Equity Professional | June 4, 2021

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