Prestige Brands agrees to acquire Blacksmith Brands stock for $190 million

Prestige Brands Holdings, Inc. ("Prestige Brands" or "Prestige") (NYSE: PBH), a leading marketer of branded consumer products, today announced that it has entered into a definitive agreement to acquire 100% of the stock of Blacksmith Brands Holdings, Inc. ("Blacksmith Brands" or "Blacksmith"), for $190 million in cash. Blacksmith, a portfolio company of Charlesbank Capital Partners, owns five leading consumer over-the-counter ("OTC") brands. The transaction is subject to customary closing conditions, including clearance under the Hart-Scott Rodino Antitrust Improvements Act of 1976, and is expected to close during the fourth quarter of calendar year 2010.

“We have a proven track record of successfully integrating brands into the Prestige portfolio. The Blacksmith operating model mirrors the Prestige model, and like Prestige, has strong free cash flow. The acquisition of Blacksmith Brands represents a transformative and exciting opportunity for us”

The brands being acquired are:

- Efferdent®, a powerful effervescence that cleans dentures and kills odor-causing bacteria;

- Effergrip®, a zinc-free denture adhesive cream;

- PediaCare®, a well-known OTC cough/cold/allergy/sinus and fever remedy for infants and children;

- Luden's®, great-tasting throat drops that relieve sore, dry and scratchy throats; and

- NasalCrom®, non-drowsy allergy prevention for allergy sufferers.

The addition of these well-known brands strengthens Prestige's platform in its core cough/cold and oral care categories, and represents a meaningful step towards the Company's commitment to increasing its presence in the OTC arena. With the addition of these five brands, OTC products in the Prestige portfolio now account for 75% of revenues and an even greater percentage of brand contribution.

"Strategic acquisitions in the OTC market are core to our shareholder value creation strategy. We are strengthening Prestige's position in key categories with the additions of Efferdent®, PediaCare® and Luden's®. These three scale brands compete in attractive categories we know well, and they provide a clear path for shareholder value creation through increased brand support and line extensions," said Matthew Mannelly, Prestige Brands Chief Executive Officer. "This transaction is consistent with our strategy of acquiring businesses that have strong consumer franchises and are important to retailers," he said.

"We have a proven track record of successfully integrating brands into the Prestige portfolio. The Blacksmith operating model mirrors the Prestige model, and like Prestige, has strong free cash flow. The acquisition of Blacksmith Brands represents a transformative and exciting opportunity for us," continued Mannelly.

The acquisition is expected to be accretive to Prestige's earnings per share in fiscal 2012 and provides excellent long-term growth opportunities for both sales and earnings.

As part of the transaction, Prestige will acquire tax attributes with a present value of approximately $16 million, which would imply an effective purchase price of $174 million. To fund the transaction, Prestige will use a combination of cash on the balance sheet and additional bank and/or bond financing.

Sawaya Segalas & Co., LLC, a leading consumer investment banking firm, is acting as a financial advisor to Prestige with respect to the transaction.

Divestiture of Cutex®

Simultaneously with the announcement of the Blacksmith transaction, Prestige also announced the divestiture of its Cutex® line of nail polish removers, the largest remaining product in its personal care segment. The sale to Arch Equity Partners of St. Louis was effective on September 1, 2010.

Source : Prestige Brands Holdings, Inc.