Colgate to buy toothpaste maker for $100 million

Colgate to buy toothpaste maker for $100 million

Colgate to buy toothpaste maker for $100 million

PORTLAND, Maine - Colgate-Palmolive Co. announced Tuesday it's buying Tom's of Maine, the leading maker of natural toothpaste, which used to tweak big toothpaste makers for putting artificial additives like saccharin in their products.

The $100 million cash deal for privately owned Tom's of Maine, which got its start in 1970 by producing a phosphate-free laundry detergent, reflects Colgate's strategy of focusing on the higher-margin oral and personal care businesses.

But founder Tom Chappell said that neither the company's business philosophy nor its quirky toothpaste flavors like fennel, apricot and orange-mango will change.

Colgate, a major rival of Procter & Gamble, said the purchase of 84 percent of the Kennebunk-based business is expected to close in the second quarter. The Chappell family that founded the company will keep a 16 percent stake. Colgate will have additional share purchase opportunities over the coming years.

Chappell said Tom's of Maine, with annual sales of about $50 million, will maintain its product formulas and be managed as a stand-alone subsidiary, much as Colgate's Science Diet pet food line has been. But he said Colgate's financial clout and distribution network will enable his brands to make inroads into national chain stores and grow to their full potential.

The U.S. market for so-called natural oral and personal care products is valued at $3 billion and is growing at 15 percent per year, Colgate said.

"The irony is that although we are growing in the high teens and low 20s, it's not enough to meet a demand 10 times the size," Chappell said in an interview. "About 25 percent of Americans are interested in these kinds of products."

Tom's of Maine products are distributed in Canada and the United Kingdom, but Chappell said the greatest growth opportunities are in the U.S. market.

He said his toothpaste is "now the number six brand in America, and I think we will be number three with the help of Colgate."

The company's operations will stay in Maine, all departments will remain intact and no jobs are being eliminated, Chappell said. "Colgate said we do not want to see synergies at the cost of people," he said.

Packaging of Tom's of Maine products will not identify the company as a Colgate subsidiary, he said.

His company has long espoused a philosophy of social responsibility and environmental awareness, and longtime customers responded to news of the Colgate acquisition with mixed feelings.

"My first thought was that's consorting with the devil," said Linda Shary of Portland, whose family brushes with Tom's of Maine toothpaste and has used some of its other products in the past.

"But on second thought, it would be great if they could partner and start getting more socially responsible products into the Colgate line."

Another Tom's of Maine customer, Marie Malin of Falmouth, had similar thoughts.

"It's always a little bit sad when these Maine-based companies are bought out by national companies," Malin said. "But it could be a good thing because the more that American consumers know about and purchase natural and organic products, the better the world will become."