Del Pharmaceuticals' net sales in the fiscal year ended December 31, 2007 were approximately $100 million. Over three quarters of those sales were from the Orajel brand.
Church & Dwight's 2007 net sales of $2.2 billion include a premium oral care business led by the Arm & Hammer toothpaste and SpinBrush brands. Adding the Orajel brand will immediately increase the gross margin for the company and will complement the strategy of building scale in core categories. The brand will be integrated into the Company's existing oral care business.
The Orajel brand has been in the market for over 40 years and has strong brand equity in a growing area of premium oral care. The brand is well known for aiding consumers with toothaches and baby teething as well as a growing toddler's toothpaste business, the Company said.
The transaction is structured as an asset purchase resulting in a cash tax benefit from intangibles amortization with a net present value of $90 million. The company will finance the acquisition with an addition to its bank credit facility combined with available cash and existing lines of credit.
The acquisition is expected to have a neutral impact on 2008 earnings per share due primarily to one-time integration costs and the step-up of inventory. "We expect it to be accretive in 2009 and contribute meaningfully to earnings and free cash flow. We also remain comfortable with our previously announced objective of achieving $2.77 in earnings per share for 2008, including any impact from the acquisition," said Craigie.