Colgate Buys Toms of Maine 35491

Colgate Buys Toms of Maine

PORTLAND, MaineColgate-Palmolive Co. (NYSE:CL) will buy 84 percentof natural personal care manufacturer Toms of Maine for $100 million in cashand future additional share purchase opportunities. The newly acquired company will operate as stand-alone subsidiary, similar toColgates Science Diet business, and will be based on the same naturalbusiness 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, isexpected to close in second quarter.

Founded in 1970 with a phosphate-free laundry detergent, Toms has focusedon higher-margin oral and personal care products markets, such as toothpastes inherbal flavors, to the tune of about $50 million in annual sales. Tom Chappell,founder and one-time staunch critic of mainstream toothpaste makers, saidColgates financial clout and distribution network will enable Toms brandproducts to grow their potential and gain greater access to national chainstores. The irony is that although we are growing in the high teens and low20s, its not enough to meet a demand 10 times the size, Chappell said. About25 percent of Americans are interested in these kinds of products. He notedToms brand toothpaste is now the sixth best selling brand in America, butColgate could help it become number three.

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