Colgate Sells Laundry Brands for $60m Onetime Gain

14 July 2005

The globe's largest toothpaste maker has announced plans to offload its US heavy-duty laundry-detergent brands in order to concentrate on more profitable toothpaste and bodycare businesses.

Colgate-Palmolive's deal with Phoenix Brands will generate a onetime after-tax gain of $60 million (€49.2m; £34m) and raise the company's North American gross profit margin by 100 basis points. It is expected to close in the third quarter.

Phoenix Brands, a consumer-products company owned by Lehman Brothers Merchant Banking Group, was established in 2003 for the purchase of some key household brands from Unilever, including Rit fabric dyes and Sunlight Dish detergent.

The current transaction with Colgate-Palmolive will add detergent brands such as Fab, Dynamo and Cold Power to its portfolio as well as the Ajax brand license for laundry detergents in the US, Canada and Puerto Rico.

The year did not begin well for Colgate-Palmolive, as its costly restructuring plan led to a slump in first quarter earnings. Further restructuring charges of $50m are expected in the third quarter, together with an estimated $35m tax charge for repatriating overseas cash.

With hopes high for the future, chairman/ceo Reuben Mark views the sale of laundry brands as 'an important part of Colgate's strategy to de-emphasize detergents while focusing on our high margin, fast-growing oral, personal and pet care businesses.'

Data sourced from Wall Street Journal Online; additional content by WARC staff