Suave Brands, a portfolio company of Yellow Wood Partners, has agreed to acquire the ChapStick brand from publicly traded Haleon for $430 million and a passive minority interest in the Suave Brands.
ChapStick functions as both a sunscreen and as a skin lubricant to help prevent and protect chafed, chapped, sunburned, cracked, and windburned lips. Ingredients used in ChapStick products include camphor, beeswax, menthol, petroleum jelly, vitamin E, and aloe. According to Yellow Wood, ChapStick is a leader in the lip care product category and is the #1 brand by volume with over 80% brand awareness. ChapStick had $142 million in revenue in fiscal 2023.
The history of ChapStick dates to the early 1880s when Dr. Charles Browne Fleet invented ChapStick as a lip balm product. In 1912, the product was purchased by John Morton and became part of the Morton Manufacturing Corporation. In 1963, A.H. Robins Company acquired ChapStick from Morton Manufacturing with Robins and Chapstick later being acquired by American Home Products (AHP) in 1988. AHP changed its name to Wyeth in 2002 and was acquired by Pfizer in 2009. Haleon (NYSE: HLN) acquired ChapStick from Pfizer in 2019.
Suave’s branded products are used by women, men, and children and include shampoos, conditioners, treatments and serums, body washes, antiperspirants and deodorants, and skin care lotions. According to the company, led by CEO Daniel Alter, Suave products are found in one out of every two United States households.
“ChapStick is the #1 lip care brand in the mass, drug, food and convenience store channels,” said Dana Schmaltz, a partner at Yellow Wood. “Chapstick products are purchased by one out of every five households in the United States; consumers love the brand. Chapstick has the highest brand awareness in lip care, as well as the strongest purchase conversion among all brands in the category. Similar to Suave, ChapStick will benefit from Suave Brands’ leadership, setting the brand up for continued innovation and growth driven by increased consumer marketing investments, as well as a more focused sales approach. We look forward to completing this transaction in the first half of 2024.”
“The Yellow Wood team established Suave Brands Company in May 2023 to acquire the Suave brand from Unilever,” said Mr. Alter. “We saw the opportunity to grow Suave with a more focused management approach while also creating the corporate infrastructure to acquire and manage additional personal care brands across multiple categories to drive synergies across the platform. We are excited to add ChapStick, another leading brand with deep equity and history, into our platform.”
Headquartered near New York City in Englewood Cliffs, New Jersey, Suave was founded in the 1930s and was one of the first brands to bring salon-quality hair care to the public. Today, Suave products are sold through mass retailers, grocery stores, drug retailers, and ecommerce platforms.
“ChapStick will be Yellow Wood’s fifth corporate carveout transaction in the past four years,” said Tad Yanagi, a partner at Yellow Wood. “The firm prides itself on having become a trusted partner to CPG companies to carve brands out and set them up for their next stage of growth. We appreciate Haleon’s collaboration on all levels and look forward to working with them to complete the carveout expeditiously.”
Yellow Wood invests in consumer brands and companies that operate in the mass, drug, food, specialty, value, club, and e-commerce channels, and have EBITDA from $10 million and $50 million.
In December 2023, Yellow Wood announced the pending acquisition of the Elida Beauty portfolio of brands from Unilever. This platform includes leading brands such as Q-Tips, Caress, TiGi, Ponds, St. Ives, and Noxzema, as well as European brands including Brut, Impulse, Monsavon, and Timotei.
In April 2022, Yellow Wood closed Yellow Wood Capital Partners III LP at its hard cap with $750 million of limited partner capital commitments. Fund III was oversubscribed and included commitments from many of Yellow Wood’s long-time limited partners. Yellow Wood’s earlier fund, Yellow Wood Capital Partners II LP, closed in July 2017 with an oversubscribed $370 million of committed capital.
Haleon (NYSE: HLN) is a provider of consumer health products with leading brands – Advil, Sensodyne, Panadol, Theraflu, Polident, and Centrum – in oral health, pain relief, respiratory health, digestive health, vitamins, minerals and supplements. The company was created in 2022 when GlaxoSmithKline Consumer Healthcare spun out of GlaxoSmithKline in 2022.
© 2024 Private Equity Professional | January 30, 2024
