Yellow Wood Partners’ acquisition streak continues with Haleon deal for Chapstick

25 Jan 2024 --- A month after acquiring a stable of well-known brands from Unilever, Yellow Wood Partners’ Suave Brands snaps up Chapstick from Haleon. The US-based private equity firm purchased Suave Brands from Unilever early last year. 

In a statement, Haleon CEO Brian McNamara says:

“Today’s announcement is consistent with Haleon being proactive in managing our portfolio and being rigorous and disciplined where there are opportunities for divestment. While Chapstick is a great brand, much loved by consumers around the world, it is not a core focus for Haleon. Selling the brand allows us to simplify our business and pay down debt more quickly. We’re confident the brand will continue to thrive under its new ownership.”

Personal Care Insights reached out to Haleon and Yellow Wood Partners for comment.

Last month, we interviewed Yellow Wood Partners co-founder Dana Schmaltz right after his company acquired Unilever’s Elida Beauty division, which includes brands Q-Tips and Pond’s skin care.

At the time, Schmaltz told us:

Yellow Wood buys Chapstick as part of a string of recent acquisitions.“We look for brands that outperform private labels, outperform competitive products, and that consumers love and that can take the form of some of these large brands, like Q-Tips or Suave or Dr. Scholl’s where they’ve been part of a big company [and] maybe didn’t get as much attention [so] we can pull them out and give them that attention and drive the sales velocity up and hopefully improve the efficiency of the brand as well to operation. We also look for brands that have great consumer weekly purchases but, quite honestly, aren’t distributed that widely. Since we’re a little smaller…we can increase the distribution.” 

Yellow Wood’s acquisition trail
This latest acquisition fits the Boston firm’s strategy of dealing with larger companies that “have a lot of brands — probably too many, so we talked to all of them about trying to maximize the value of some of these smaller brands…”

Last February, the company made its first deal with Unilever for Suave, the hair care brand founded in 1929. 

Schmaltz told us, since the acquisition, “We’re getting consumers to trade back into Suave, and once again, once people try it, the repurchase rate is over 70%, so we think increasing that trial will lead to further growth of the brand.”

Sealing the Chapstick deal
Haleon will receive approximately US$430 million in pre-tax cash proceeds, plus passive minority interest in the Suave Brands Company. The consumer health company adds, “At the time of entering into the binding agreement, this interest was valued at approximately US$80 million. Cash proceeds from the sale will be used to pay down debt, underpinning our confidence to de-lever to net debt/Adjusted EBITDA of below 3x during 2024.”

According to the company statement, ChapStick generated £112 million (~US$143 million) in revenue for the fiscal year ending December 31, 2023. Haleon will provide further details about the transaction at the end of February as part of its earnings release.

The sale is expected to close in the second quarter of 2024.

By Anita Sharma