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Church & Dwight Acquires Hero Cosmetics in $630 Million Deal

Published September 7, 2022
Published September 7, 2022
Hero Cosmetics

Church & Dwight signed a definitive agreement to acquire Hero Cosmetics in a $630 million deal.

WHO: Hero Cosmetics is an acne and skin solutions brand launched in 2017 with one Mighty Patch Original product. Now, Hero Cosmetics sells a Mighty Patch box every two seconds. Hero Cosmetics has expanded beyond the pimple patch category, creating innovative solutions for every pimple problem. From post-acne healing to prevention to daily protection to body care, Hero Cosmetics has grown into a comprehensive range of 30 stock-keeping skin solutions priced from $12.99 to $32.

Church & Dwight, founded in 1846, is the leading US producer of sodium bicarbonate, popularly known as baking soda. The company manufactures and markets a wide range of personal care, household, and specialty products under recognized brand names such as Arm & Hammer, Trojan, Oxiclean, Spinbrush, First Response, Nair, Orajel, Xtra, L'il Critters, Vitafusion, Batiste, Waterpik, Zicam, Flawless, and Therabreath. These 15 key brands represent approximately 85% of the company's product sales.

WHY: Church & Dwight expects to expand Mighty Patch's limited distribution by leveraging its US retailer relationships and international footprint. Following the deal, Hero plans to update packaging and increase marketing efforts.

IN THEIR OWN WORDS: "Mighty Patch represents a powerful addition to our existing Specialty Hair and Skin portfolio which includes Nair, Batiste, Viviscal, Flawless, and Toppik," said Matthew T. Farrell, Church & Dwight Chief Executive Officer. "The Mighty Patch brand is a problem/solution product with a strong position in a growing category. The total acne treatment category in tracked channels is approximately $700 million. The patch form has grown to 18% of the acne treatment category as more consumers transition away from lotions and ointments to a patch solution. The brand skews towards younger consumers and consistently has a high level of brand loyalty and repeat purchase."

"Hero is located in New York City with a highly capable management team led by the 3 founders, Ju Rhyu, Dwight Lee, and Andrew Lee," Mr. Farrell continued. "In addition to cash, approximately 10% of the purchase price will be conveyed to the founders in restricted stock. The founders are expected to remain and continue to run the business while leveraging Church & Dwight's scale and capabilities. We intend to maintain the NYC location and retain Hero employees. We are pleased to welcome them to the Church & Dwight family. Hero is nimble and asset light and should be an excellent fit at Church & Dwight."

Mr. Farrell continued, "We are excited about adding Church & Dwight's 15th power brand. This acquisition meets our long-standing acquisition criteria: (1) #1 or #2 brand in a category; (2) asset-light; (3) a growing brand; and (4) gross margin accretive to the Company. Acquisitions have been a key driver of Church & Dwight's consistently strong shareholder returns."

The three founders are thrilled about the partnership with Church & Dwight. "We are excited to combine a brand that people love with Church & Dwight's expertise and scale to continue driving success and growth in the market. Our cultures are a strong complement to one another and we are ready to take Hero into the next chapter and beyond as part of the Church and Dwight family," said Ms. Rhyu, co-founder/CEO, Hero.

In 2021, Hero acquired a minority investment from Aria Growth Partners for an undisclosed sum. Said Trevor Nelson and Jackie Dunklau, co-founders of the private equity firm, in an email to WWD: "Aria has been honored to work alongside Ju, Dwight, Andy and their outstanding team. Hero represents the best of the beauty world: amazing founders who've forever changed for the better the way in which people solve emotionally charged skin care issues."


  • Church & Dwight acquired Hero Cosmetics for $630 million representing a 5.5X multiple of the $115 million 12 months and a 14X multiple of the $45 million EBITDA generated during the same period. 
  • Approximately 10% of the purchase price will be conveyed to the founders in Church & Dwight restricted stock.
  • Rhyu will remain the brand's CEO, and co-founders Dwight Lee and Andy Lee will continue in their respective roles as Chief Operating Officer and Design Officer.
  • The products are available in roughly 8,000 US doors, including Target, Ulta Beauty, CVS Pharmacy, Bloomingdale's, Kohl's, Urban Outfitters, Neiman Marcus, and other retailers, as well as online. 
  • The business is projected to reach $140 million in sales in 2022, up from $100 million in 2021. 
  • Hero's trailing 12 months EBITDA as of June 30, 2022, was approximately $45 million, with a 40% EBITDA margin. 
  • The brand's hero product, Mighty Patch, is the #2 brand in the acne category in the United States and the #1 patch brand in acne, with approximately 70 percent of Hero customers entering the brand through a purchase of this product. 
  • Looking forward to 2023, the acquisition is expected to be 3% accretive to cash earnings and neutral to adjusted 2023 EPS, inclusive of transition costs, interest expense, and intangible amortization. In 2023, Hero's annual net sales are projected to grow approximately 15% to $150 million.
  • In 2021, Aria Growth Partners made a minority investment in Hero Cosmetics. The terms of the deal were not disclosed, but this was the first outside capital.
  • Investment firm Financo Raymond James advised on the deal.
  • Church & Dwight acquired TheraBreath in a $580 million cash deal in 2021.

BeautyMatter Founder Kelly Kovack in conversation with Ju Rhyu, Co-Founder and CEO of Hero Cosmetics.

Cult products are almost impossible to manufacture.This coveted status grows organically and happens when a product resonates with a loyal, sometimes fanatic community of fans. In today's fast moving beauty space where trends happen at the speed of TikTok, achieving cult status that sticks can be elusive. It requires vision and serious business chops. Listen Here.


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