Colgate Announces Acquisition of GABA Holding AG Strengthening its Oral Care Business in Europe and Confirms 4th Qtr. and Full Y
December 18 2003 - 8:11AM
PR Newswire (US)
Colgate Announces Acquisition of GABA Holding AG Strengthening its
Oral Care Business in Europe and Confirms 4th Qtr. and Full Year
2003 Earnings Estimates NEW YORK, December 18, 2003
/PRNewswire-FirstCall/ -- GABA Acquisition Colgate-Palmolive
Company (NYSE:CL), world leader in toothpaste, today announced it
has agreed to purchase the European oral care company GABA Holding
AG. This privately owned Swiss company has long-standing ties to
the dental community, in-depth distribution and market leadership
in the very important European pharmacy channel. GABA products are
professionally endorsed with a high therapeutic reputation. This
strategic acquisition will greatly strengthen Colgate's important
oral care business in Europe. Reuben Mark, Colgate's Chairman and
CEO said, "GABA is one of the few major privately held toothpaste
companies worldwide. Looking back, we were able to improve our
already strong Asian toothpaste business in 1985 when we formed a
joint venture with the Hawley & Hazel oral care company.
Similarly, in 1995 we acquired the Kolynos toothpaste franchise,
materially strengthening our powerful Latin American oral care
business. The GABA acquisition should have a similar effect on our
overall European toothpaste business, where we are already #1."
GABA has sales of almost $300 million in 15 European countries of
which over $200 million is oral care. The transaction will be
structured as an all cash acquisition of up to 100% of the
outstanding shares of GABA for an aggregate price ranging from
CHF800 million (US$630 million) to CHF1050 million (US$830
million), depending on the number of shares acquired and subject to
a purchase price adjustment. The acquisition is subject to Colgate
acquiring more than 80% of the outstanding GABA shares at closing.
Holders of slightly over 80% have already agreed to sell their
shares. Included in the assets of the business to be acquired is
US$110 million of net cash. Mr. Mark continued, "GABA is an
excellent strategic fit with Colgate's high-margin global oral care
leadership, and will help us as we methodically increase that
leadership around the world. This highly complementary business
combination should further accelerate the growth of both Colgate
and GABA brands while expanding our leadership positions throughout
Europe. "GABA's strength in the important European pharmacy channel
complements Colgate's leading presence in mass retail and GABA's
therapeutic positioning complements Colgate's multi-benefit product
line. Colgate will also benefit from GABA's long established
relationships with the European dental community. GABA has the
strongest dental detailing force in Europe and is the number one
recommended brand by dentists in their key markets." The
acquisition is expected to have a dilutive effect of approximately
3% on total company earnings in 2004, an approximately neutral
effect in 2005 and a positive effect on earnings anticipated from
growth and efficiencies by 2006. It is expected that Colgate's
strong cash flow and balance sheet should allow for substantially
all of the acquisition related debt to be repaid during 2004. The
acquisition is subject to regulatory approvals in several European
countries and other customary conditions. Business Update Colgate
took the opportunity of the acquisition announcement to again
reconfirm that earnings for the fourth quarter and full year 2003
are expected to be within the range of external estimates, and as
discussed in the 3rd quarter earnings conference call on October
23, 2003. Worldwide sales in the fourth quarter will be up in the
mid-single digits, as expected, with global volume up in the low
single digits. Improved currency rates worldwide and stronger than
expected business in Latin America offset slightly lower volume
than expected in the developed world. Despite extraordinary
competitive conditions in North America, North American volume
excluding Simply White whitening gel should be up low to mid single
digits in the fourth quarter, as expected, while overall North
American volume will be down when compared to the fourth quarter
2002 which included the Simply White sell-in. Colgate also
confirmed that the previously announced agreement to sell its
European laundry detergent brands to the Procter & Gamble
Company received the requisite French regulatory approvals within
the last 48 hours, and the transaction should be completed this
year. As previously disclosed, it is expected that the one-time
gain resulting from this transaction will be largely offset by
one-time charges associated with divesting these detergent
operations. In addition, a portion of the gain, approximately $.03
to $.04 per share, will be used to offset the greater than
anticipated loss in the U.S. from Simply White whitening gel in the
latter part of 2003. The Simply White loss results from high
advertising and promotional costs together with lower than expected
revenues on this product. At 10:00 a.m. ET today, Colgate will host
a conference call to elaborate on the GABA acquisition. To access
the conference call, the domestic dial-in number is 800-810-0924
and the international dial-in number is 913-981-4900. Use
confirmation code 693895. To access a replay of the conference call
after 12:00 p.m. ET, the domestic dial-in number is 888-203-1112
and the international dial-in number is 719-457-0820. To access
this call as a webcast, please go to Colgate's web site on the
internet at http://www.colgate.com/. * * * About Colgate-Palmolive:
Colgate-Palmolive is a leading global consumer products company,
tightly focused on Oral Care, Personal Care, Household Surface
Care, Fabric Care and Pet Nutrition. Colgate sells its products in
over 200 countries and territories around the world under such
internationally recognized brand names as Colgate, Palmolive,
Mennen, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, Ajax,
Axion, Soupline, Suavitel and Fab, as well as Hill's Science Diet
and Hill's Prescription Diet pet foods. For more information about
Colgate's global business, visit the Company's website at
http://www.colgate.com/. This press release and the related webcast
(other than historical information) may contain forward-looking
statements. Actual events or results may differ materially from
those statements. Investors should consult the Company's filings
with the Securities and Exchange Commission (including the
information set forth under the caption "Cautionary Statement on
Forward- Looking Statements" in the Company's Form 10-K for the
year ended December 31, 2002) for information about factors that
could cause such differences. Copies of these filings may be
obtained upon request from the Company's Investor Relations
Department or the Company's website on the internet at
http://www.colgate.com/. DATASOURCE: Colgate-Palmolive Company
CONTACT: Bina Thompson, +1-212-310-3072, or Hope Spiller,
+1-212-310-2291, both of Colgate-Palmolive Company Web site:
http://www.colgate.com/
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