Deal Is a Natural

Colgate purchasing Tom's of Maine

Published in CSP Daily News

KENNEBUNK, Maine -- Colgate-Palmolive Co., as part of its strategy to focus on its higher-margin oral and personal care businesses, has agreed to purchase Tom's of Maine, a leader in the naturals market in the United States.

The U.S. market for natural oral and personal care products is valued at $3 billion and is growing at 15% per year, the company said. Tom's of Maine, founded in 1970 by Tom and Kate Chappell, pioneered natural toothpaste, mouthwash and deodorant.

Tom's of Maine gives Colgate the opportunity to enter the health [image-nocss] and specialty trade channel where Tom's toothpaste is the market leader, commanding 60% share of that channel, according to the company.

Reuben Mark, Colgate's chairman and CEO said, We have great admiration for Tom and Kate Chappell and the values-based business they have created. The combination of Colgate, the global leader in Oral care, and Tom's of Maine, the leader in the naturals category, is an exciting partnership with growth opportunities for both companies.'

Tom Chappell will continue to lead the company, Colgate said, and it will continue to be based in Kennebunk, Maine.

This acquisition allows Colgate to strongly enter a completely new channel of distribution and establishes us as the only global oral care company in that channel, said Ian Cook, Colgate's president and COO. This bodes well for additional opportunities in other high-margin categories such as personal care. Further, our truly global reach will help speed the growth of the naturals health and specialty business outside the U.S. With gross profit margins a full ten percentage points higher than Colgate's margin, Tom's of Maine is a logical acquisition as we continue to prioritize our global oral and personal care categories.

Tom Chappell said, We chose Colgate as our partner because they have the global expertise to help take Tom's of Maine to the next level. Just as importantly, we see Colgate as an excellent fit with our own cultural values. Colgate has a commitment to product excellence, to global efforts to promote oral health and has a 200-year history of caring for consumers and for giving back to the community. We are excited by Colgate's desire to continue Tom's of Maine leadership and heritage in natural care.

The transaction will be structured as an all cash acquisition of 84% of the outstanding shares of Tom's of Maine for an aggregate price of approximately $100 million, subject to adjustment at closing, which is expected in the second quarter of this year. The effect on Colgate's profits is expected to be neutral in 2006 and increasingly positive each year thereafter. The Chappell family will retain a 16% ownership interest, with additional share purchase opportunities for Colgate over the coming years.

The purchase is subject to regulatory approval and other closing conditions.

Tom's of Maine productstoothpaste, mouthwash, floss, deodorant, and soapdo not contain artificial sweeteners, preservatives, colors, flavors, or animal ingredients; are tested for safety and efficacy without the use of animals; are biodegradable; and are packaged in earth-friendly ways. Guided by a philosophy of Natural Care the company donates 10% of profits to charitable organizations and encourages employees to use 5% of their paid time in volunteer work.

Colgate-Palmolive brands include Colgate, Palmolive, Mennen, Softsoap, Irish Spring, Protex, Sorriso, Kolynos, Elmex, Ajax, Axion, Soupline and Suavitel, as well as Hill's Science Diet and Hill's Prescription Diet pet foods.