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STOCKHOLM — Moberg Pharma AB has agreed to acquire New Skin, Fiber Choice and PediaCare from Prestige Brands Holdings Inc. for $40 million.
The three brands had net sales of $24.4 million in the year ended March 31. Moberg expects the acquisition to contribute to its EBITDA (earnings before interest, taxes, depreciation and amortization) with approximately $5 million for the 12 months following the transaction’s closing. The deal is being financed by available cash and a tap issue to Moberg’s outstanding bond loan.
The brands will be sold through Moberg’s O-T-C channel in the U.S., primarily in chain drug stores including CVS Pharmacy, Walgreens and Rite Aid Corp. and in mass merchandisers including Walmart and Target Corp.
New Skin is the main profitability contributor in the portfolio and is well aligned with Moberg’s strategic focus on topical dermatology. New Skin is the No. 1 over-the-counter liquid bandage brand in the U.S. It is an antiseptic that kills germs and dries rapidly to form a clear protective cover.
Fiber Choice focuses on digestive health with a lineup of product options for daily fiber supplementation.
PediaCare has strong equity among mothers, based on effective products for children, primarily within cough cold and analgesics segments.
Based on Moberg Pharma’s cost structure and accounting principles, the purchase price corresponds to approximately eight times expected EBITDA for the three brands for the 12 months following the closing, which is expected in July.
“This acquisition is in line with our strategy to add critical mass to Moberg’s U.S. operations as well as a leading topical brand to our core dermatology franchise,” said chief executive officer Peter Wolpert. “This transaction is an excellent use of the proceeds from the bond loan issue earlier this year and the funds released in the recent divestment of noncore brands to Strides Pharma Inc. The acquired brands will immediately contribute significantly to our sales and earnings and also to our long-term financial goal of delivering profitable growth and an EBITDA margin of 25%. In three recent transactions, we have established relationships with major O-T-C players — Bayer, Chattem and now Prestige — which also will facilitate future transactions.”
“We see excellent opportunities to build on the brand equity of New Skin,” said Jeff Vernimb, general manager of Moberg Pharma North America. “This is a market-leading brand with exciting prospects for growth. We will leverage our innovation engine to further strengthen the future value proposition of this brand as well as Fiber Choice and PediaCare to consumers and retailers.”
Prestige said the divestitures will enable it to move closer to its goal of having a portfolio consisting of 85% of revenue from “invest for growth” brands and 15% in “manage for cash” brands to help support long-term organic growth. The company plans to use the proceeds to pay down debt and accelerate deleveraging.
