Church & Dwight Buys Hero for $630M

Church & Dwight Co., Inc. (NYSE:CHD) has signed a definitive agreement to acquire the Hero Mighty Patch brand (Hero) and other acne treatment products for $630 million, consisting of cash and Church & Dwight restricted stock. Mighty Patch is the number-two brand in the acne category in the United States and the number-one patch brand in acne. The transaction, which is subject to customary closing conditions, is expected to close in the fourth quarter.

Hero’s net sales for the trailing 12 months through June 30, 2022 were approximately $115 million. The acne patch is the fastest growing treatment form in acne. The products are currently only marketed in the U.S.
Said CEO Matthew Farrell, “Mighty Patch® represents a powerful addition to our existing Specialty Hair and Skin portfolio which includes Nair, Batiste, Viviscal, Flawless, and Toppik.

"The Mighty Patch® brand is a problem/solution product with a strong position in a growing category. The total acne treatment category in tracked channels is approximately $700 million. The patch form has grown to 18% of the acne treatment category as more consumers transition away from lotions and ointments to a patch solution. The brand skews towards younger consumers and consistently has a high level of brand loyalty and repeat purchase.”

Hero’s trailing 12 months EBITDA as of June 30, 2022 was approximately $45 million, with a 40% EBITDA margin. Church & Dwight expects to expand Mighty Patch®’s limited distribution by leveraging its U.S. retailer relationships and international footprint.

CHD shares dropped $2.26, or 2.7%, to $81.92.