Batteries And Bunnies And Bras—Oh My!

Energizer to buy Playtex for $1.2B

Deal builds battery maker's personal care product range to better compete with Procter & Gamble.

July 13 2007: 6:23 AM EDT

NEW YORK (Reuters) -- Battery and razor maker Energizer Holdings Inc. said Thursday it would buy Playtex Products Inc. in an all-cash deal worth about $1.2 billion to grow Energizer's personal care product range.

St Louis-based Energizer (Charts) will pay $18.30 a share - and assume the debt - for Playtex (Charts), which makes leading sun-screen products like Banana Boat and Hawaiian Tropic. Playtex also markets a range of other feminine care and infant care products.

The deal offers shareholders of Playtex a premium of 17.9 percent to Playtex's closing price of $15.52 on Thursday on the New York Stock Exchange. The deal value of $1.16 billion is based on 63.46 million shares outstanding as of April 30, according to a recent regulatory filing.

An Energizer and Playtex combination would create a more formidable opponent to the much larger Procter & Gamble Co. (Charts, Fortune 500), better able to compete in the battery, razor and feminine care product market.

Procter & Gamble owns Duracell and Gillette which compete against Energizer's namesake batteries and Schick razors. Procter & Gamble also own the tampon brand Tampax which competes against Playtex's namesake tampon brand.

Playtex trades at a multiple of about 29.6 times forward earnings while Procter & Gamble trades at about 18.1 times estimated earnings.

"We see Playtex as an exceptionally great fit with Energizer, with similar customers and distribution channels in the U.S. and Canada, and the opportunity for geographic expansion," Energizer Chief Executive Ward Klein said in a statement.

Energizer said the deal will boost its fiscal 2008 results and it expects to the deal to close in the fall of 2007. The company plans to finance the acquisition through cash and credit facilities.

But Energizer warned that the deal could dilute earnings in the first quarter and possibly the second quarter.

"There are significant integration and cost reduction opportunities for the combined businesses," said Klein.

The deal, which was approved unanimously by the boards of both companies, has an enterprise value of about $1.9 billion.

Banc of America Securities acted as advisers to Energizer, while Lehman Brothers acted as advisers to Playtex.