On the heels of acquiring Alkos, Knowlton Development Corporation (KDC/ONE) is making another acquisition. Personal care and beauty manufacturer Swallowfield has agreed to sell its manufacturing business to KDC/ONE in a deal worth £35MM.
WHO: Swallowfield is a private-label manufacturer and established leader in the personal care and beauty space with more than 140 years of experience. Swallowfield’s manufacturing business focuses on the development, formulation, and supply of products for customers that include many of the world’s leading brands. Swallowfield also has a portfolio of owned brands that were acquired in a 2016 Brand Architekts’ transaction. The portfolio consists of mid-premium beauty, body, and haircare brands sold at major UK and international high street retailers. Headquartered in Wellington, UK, the manufacturing business has approximately 560 employees and operates across three main facilities in Europe (two in the United Kingdom and one in Czech Republic), as well as a sourcing office in China and sales offices in Paris and New York.
Established in 2002, KDC/ONE is the largest custom formulator in North America, with a network of best-in-class custom formulators and manufacturers of color cosmetics, skincare, haircare, bath & body, fragrance, deodorant, home, health, industrial, and auto care products. The company has its head offices in Longueuil, Québec. KDC/ONE has 13 operating facilities located throughout North America and in France, employing over 5,200 people. In December 2018, KDC/ONE accelerated its international growth strategy by partnering with Cornell Capital, a private investment firm based in New York and Hong Kong, alongside other investors including Caisse de dépôt et placement du Québec (CDPQ), Investissement Québec, and HarbourVest Partners.
WHY: The transaction with Swallowfield represents the latest opportunity for KDC/ONE to expand its manufacturing capabilities in Europe, add strategic technologies, and diversify its customer base, while continuing to bolster its existing distribution channels.
IN THEIR OWN WORDS: “Following KDC/ONE’s successful acquisition of Paris-based ALKOS Group earlier this month, we are confident that Swallowfield’s operations will further enhance our strategic presence in the region and solidify our leadership in beauty, health and personal care around the world,” said Nicholas Whitley, president and CEO of KDC/ONE. “The Company’s international capabilities make it a natural complement to KDC/ONE, and its strong reputation for quality, service and innovation matches KDC/ONE’s own dedication to high-touch innovation, operational excellence and speed to market. Together with Cornell Capital, we look forward to working closely with Swallowfield’s team to capitalize on the significant cross-selling opportunities, and further diversify KDC/ONE’s customer base and channels.”
“We believe that by joining a larger, focused entity, our Manufacturing business will move forward with a clearer vision for the future while protecting the value of the business,” said Brendan Hynes, Chairman of Swallowfield. “We’re excited the team will have access to world-class resources and a broader platform to continue to expand product lines and accelerate growth.”
“We are excited to join the KDC/ONE team, as we bring together the unmatched product and technology portfolios and world-class manufacturing capabilities of these two companies,” said Matthew Gazzard, Chief Financial Officer of Swallowfield, who in connection with the closing will be appointed President of KDC/ONE Swallowfield Ltd. (“KDC/ONE Swallowfield”). “As part of a private company, Swallowfield will be well positioned to continue investing in new technology and bringing product ideas to life, while creating increased value for all stakeholders.”
- KDC/ONE acquires Swallowfield’s manufacturing business for a total cash consideration of approximately £35 million (approximately C$57 million; $43 million US), subject to adjustment for the working capital of the manufacturing business at the date of completion.
- Swallowfield forecasted that its pre-tax profits for the year ended 29 June would be “slightly ahead” of the previous year’s figure, while revenues had increased 7% in the period compared to 5% growth in 2018.
- Following the sale, Swallowfield said it would have around £23MM in cash on hand that would be used to “drive organic growth” and for future acquisition opportunities.
- Upon the transaction closing, Swallowfield’s Matthew Gazzard will become KDC/ONE Swallowfield President and Jane Fletcher will be KDC/ONE Swallowfield Sales & Marketing Director. Tim Perman will remain Chief Executive Officer of Swallowfield’s Brand Business.
- Following the transaction, Swallowfield plc will retain the owned brands division under the ownership of the PLC, and will now be based in Teddington. It is expected that the group will change its name to Brand Architekts Group plc.
- The entire manufacturing business and associated assets will be wholly owned by KDC/ONE and operate as KDC/ONE Swallowfield. At closing, all employees within the manufacturing business will transfer to KDC/ONE.
- KPMG is acting as financial advisor to KDC/ONE, and Weil, Gotshal & Manges is acting as legal advisor.
- Baylor Klein is acting as financial advisor to Swallowfield plc, and Ashfords LLP is acting as legal advisor.
Photo: via Swallowfield