Colgate Buys Toms of Maine

PORTLAND, Maine--Colgate-Palmolive Co. (NYSE:CL) will buy 84 percent of natural personal care manufacturer Toms of Maine for $100 million in cash and future additional share purchase opportunities. The newly acquired company will operate as a stand-alone subsidiary, similar to Colgates Science Diet business, and will be based on the same natural business mottos and product formulas as it has for the last 35 years. The deal, which will leave the founding Chappell family with 16 percent ownership, is expected to close in second quarter.

Founded in 1970 with a phosphate-free laundry detergent, Toms has focused on higher-margin oral and personal care products markets, such as toothpastes in herbal flavors, to the tune of about $50 million in annual sales. Tom Chappell, founder and one-time staunch critic of mainstream toothpaste makers, said Colgates financial clout and distribution network will enable Toms brand products to grow their potential and gain greater access to national chain stores. The irony is that although we are growing in the high teens and low 20s, it's not enough to meet a demand 10 times the size," Chappell said. About 25 percent of Americans are interested in these kinds of products. He noted Toms brand toothpaste is now the sixth best selling brand in America, but Colgate could help it become number three.

According to Chappell, his company, which maintains 90 products and 160 employees, will stay in Kennebunkport, Maine, and will not experience any lay-offs due to the acquisition. Colgate said we do not want to see synergies at the cost of people, said Chappell, who will also stay onboard to lead the subsidiary. He further noted the packaging on Toms products, which are also sold in Canada and the United Kingdom, will make no reference to its new corporate owner.