Bayer is selling Dr. Scholl’s foot care brand to US private investment firm Yellow Wood Partners for $585 million.

WHO: Dr. Scholl’s is a 110-year heritage brand with unmatched brand equity in the foot care category. Its number-one position in the category makes it synonymous with foot care.

Yellow Wood Partners is a Boston-based private investment firm that invests exclusively in the consumer industry in the middle market. The firm seeks to acquire branded consumer products across a variety of channels including mass, drug, food, specialty, club, and e-commerce.

Bayer is a global enterprise with core competencies in the life science fields of health care and nutrition. The Bayer brand stands for trust, reliability, and quality throughout the world. In fiscal 2018, the group employed around 117,000 people and had sales of 39.6 billion.

WHY: The divestment is part of a streamlining of operations because of investor criticism of business models and an effort to boost share price.

IN THEIR OWN WORDS: “The Yellow Wood team is excited to become the next steward of the iconic Dr. Scholl’s™ brand,” said Dana Schmaltz of Yellow Wood Partners. “Dr. Scholl’s™ is the leading brand in the footcare category and we see great potential to grow the brand in its existing and other sales channels. The brand fits extremely well into the Yellow Wood consumer-focused business model as our firm has the operating experience from other carve-out investments to work with the Bayer employees who are continuing with the brand to build an exciting new stand-alone platform company.”

“We believe that we have found the right partner in Yellow Wood Partners to continue to invest in and grow the Dr. Scholl’s™ brand,” said Heiko Schipper, member of Bayer’s Board of Management and President of Consumer Health. “Since Bayer took ownership of Dr. Scholl’s™ in late 2014, we have made progress in revitalizing the brand and developing an exciting pipeline of innovative products. We look forward to seeing the brand taken to the next level of success under Yellow Wood’s ownership.”

DETAILS:

• Yellow Wood Partners will acquire the product rights to Dr. Scholl’s in the Americas and take over approximately 30 dedicated brand personnel in the United States and Canada, including Sales and Marketing, Research & Development, and others from Bayer for $585 million.
• Dr. Scholl’s is primarily a North American brand, and generated $234 million in sales in 2018. Reckitt Benckiser owns the Scholl foot care business outside North America.
• Yellow Wood will create a standalone company for the Dr. Scholl’s brand and plans to invest in the business to drive growth and profitability.
• Citi and Sawaya Partners acted as financial advisors to Bayer.
• Covington & Burling provided legal advice. Fried Frank acted as legal advisor to Yellow Wood.
• Yellow Wood Partners acquired Paris Presents in the fall of 2018 and Freeman Beauty in the summer of 2017.
• Yellow Wood Partners divested PDC brands for $1.5 billion in June of 2017.