Colgate-Palmolive Company (NYSE:CL) announced last week that Tom's of Maine, a manufacturer of fluoride-free natural toothpaste-(click here for a post about why that might be good), had agreed to a deal.
Colgate will pay $100 million for the acquisition of 84% of the outstanding shares; the founders will retain 16%, allowing Colgate the option to acquire additional shares in the future.
Tom's of Maine co-founders Tom and Kate Chappell said (apparently in chorus):
We chose Colgate as our partner because they have the global expertise to help take Tom's of Maine to the next level. Just as importantly, we see Colgate as an excellent fit with our own cultural values. Colgate has a commitment to product excellence, to global efforts to promote oral health and has a 200-year history of caring for consumers and for giving back to the community. We are excited by Colgate's desire to continue Tom's of Maine leadership and heritage in natural care.
Reuben Mark, Colgate's Chairman and CEO said:
We have great admiration for Tom and Kate Chappell and the values-based business they have created. The combination of Colgate, the global leader in Oral care, and Tom's of Maine, the leader in the Naturals category, is an exciting partnership with growth opportunities for both companies. And we're especially pleased that Tom Chappell will remain on to lead the company, which will continue to be based in Kennebunk, Maine.
I buy it. I think it makes sense for both companies to complete the deal. This will give Tom's access to a much bigger distribution channel and it will give Colgate access to faster growing market. What could be wrong with that?
What do you think?
You should remember that while I am an investment banker, this blog is intended for educational purposes and should never be treated as investment advice, an offer to sell or a solicitation of an offer to purchase any security.
Note: photos courtesy of www.tomsofmaine.com/ and www.colgate.com.
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