Henkel/Dial to buy Right Guard, Soft & Dri and Dry Idea

Henkel's U.S.-based Dial Corp. subsidiary is buying antiperspirant and deodorant brands from Gillette, a subsidiary of Procter & Gamble for $420 million, it said on Monday.

German toiletries, cosmetics and detergent maker Henkel said the 2005 sales of these brands, which include Right Guard, Soft & Dri and Dry Idea, were about $275 million.

The company said the transaction would make it the third-biggest company in the U.S. deodorants market.

"These leading brands are a perfect fit to our core business body care and will further increase growth and profitability of this business," said Hans Van Bylen, executive vice president of Henkel Cosmetics/Toiletries.

The transaction is subject to antitrust approval, but the company expects to close the deal before the end of the first quarter of 2006 and should be the last divestiture required by federal regulators as part of the Boston shaving giant's takeover by Procter & Gamble.

''This was a move that had to happen because of the FTC ruling," said Eric Kraus, a Gillette spokesman. ''It's premature to discuss what impact, if any, there will be on the employees in Andover. It's very early in the process."

 

 

Already, P&G has sold off its Crest SpinBrush line to Church & Dwight and Gillette's Rembrandt teeth-whitening products to Johnson & Johnson to satisfy regulators.

P&G also had to shed some deodorant brands because Gillette's Right Guard line and P&G's brands would give the combined company a dominant market share in the men's deodorant category in the United States. P&G owns Old Spice, the number two brand with 19 percent of market share, and Gillette owns Gillette Series and Right Guard, a number one player with combined 24 percent market share, according to a report by AG Edwards analyst Jason Gere. All of these brands together would give P&G about a 43 percent share of the market, compared to rivals Unilever Co.'s 18 percent share and Colgate-Palmolive 16 percent share.

 

Right Guard, which had about $150 million in sales in 2004, was introduced in 1960 in an aerosol can.

 

Gillette's $420 million deal would make Dial's German parent company, Henkel KGaA, the number three deodorant maker in the United States. About 80 percent of the sales for these brands are from North America; the rest are from the United Kingdom, Latin America, and Australia.

 

''These leading brands are a perfect fit to our core business, body care, and will further increase growth and profitability of this business," Hans Van Bylen, executive vice president of Henkel Cosmetics and Toiletries, said yesterday in a statement. ''We are excited to become the number three in the attractive US deodorants market through this acquisition, thus complementing the strong Dial portfolio."

 

The deal with Henkel, which manufactures Persil detergent and Fa shampoo, is expected to close in the spring. It requires approval from antitrust authorities to proceed.

 

P&G's takeover of Gillette brings together the Cincinnati company's Tide detergent and Pampers diapers with Gillette's razors and blades and the Oral-B dental care line. The transaction will result in about 5,000 job cuts from a combined company workforce of 140,000. So far, about 40 percent of Gillette Co.'s top 135 executives and managers are leaving or have left the Boston shaving giant as P&G completes its acquisition. All employees will know their job status within a few months, the company has said.