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Haleon Plc revealed it has agreed to offload its famous Chapstick lip balm line. The line will be sold to Yellow Wood Partners, the parent company of Suave Brands Company. The firms agreed to a $430 million all-cash sale arrangement.
According to Bloomberg, the deal's total value may reach up to $510 million. Haleon decided to remove Chapstick from its brand portfolio to streamline its business and other leading products.
Terms of the Deal
Haleon confirmed on Thursday, Jan. 25, that as part of the deal, it will receive $430 million in cash. The company will also be given a minority stake in Suave Brands, and this share is worth about $80 million.
Moreover, the British consumer healthcare company headquartered in Weybridge, England, will get pre-tax cash proceeds from the sale. The company will then use the funds to pay its existing debt.
Completion of the Acquisition
ChapStick was said to have generated about £112 million in revenue for the recent fiscal year ending Dec. 21, 2023. Haleon and Suave Brands expect to complete the acquisition by the second quarter of this year. However, it should be noted that the sale is still subject to the usual customary closing conditions.
"Today's announcement is consistent with Haleon being proactive in managing our portfolio, and being rigorous and disciplined where there are opportunities for divestment," Haleon's chief executive officer, Brian McNamara, said in a press release. "While ChapStick is a great brand, much loved by consumers around the world, it is not a core focus for Haleon."
The CEO went on to say, "Selling the brand allows us to simplify our business and pay down debt more quickly. We are confident the brand will continue to thrive under its new ownership."
Photo by: Haleon Press Release
