After filing for Chapter 11 bankruptcy last December, High Ridge Brands’ oral care business is set to be acquired by an affiliate of Perrigo Company, and its hair and skincare businesses will be acquired by an affiliate of Tengram Capital Partners.

WHO: High Ridge Brands was formed in 2010 to acquire the rights to Zest for the US, Canada, and certain other territories, from Procter & Gamble and to serve as a platform for strategic acquisitions in the personal care segment. The Stamford, Connecticut-based company is owned by the private equity firm Clayton, Dubilier & Rice. Much of the company’s portfolio is sold through discounters like Dollar Tree, Walmart, and 99 Cents Only stores.

Tengram Capital Partners is a private equity firm exclusively focused on investments in leading middle-market consumer companies that own strong recognizable brands. The team has a diverse background of consumer investing and operating expertise that assists and guides company management to unlock the true potential of their brands. Tengram invests in both traditional “growth” and “restructuring/turnaround” situations in each of the public and private sectors. Other Tengram investments include Algenist, Centric Brands, Lime Crime Beauty, Tommie Copper, CosBar, ReVive, Sequential Brands Group, and El Cap.

Perrigo Company is dedicated to making lives better by bringing “Quality, Affordable Self-Care Products“ that consumers trust everywhere they are sold. The company is a leading provider of over-the-counter health and wellness solutions that enhance individual well-being by empowering consumers to proactively prevent or treat conditions that can be self-managed.

WHY: High Ridge Brands filed a voluntary Chapter 11 bankruptcy in Delaware with plans to sell itself in a court-supervised process in December 2019 after a pre-bankruptcy marketing process that began in September failed to generate a stalking horse or lead bidder for its assets.

IN THEIR OWN WORDS: “We are pleased to conclude a successful and competitive auction process,” Patricia Lopez, High Ridge Brands’ CEO and President, said. “This outcome maximizes the value of our strong brands and supports the interests of all of our stakeholders. The buyers bring significant resources and experience and have long track records helping acquired brands build on their strong foundations and continue to grow. The transaction will be seamless for both our customers and consumers. As we finalize the sale, we remain focused on continuing the on-time, in-full deliveries of all our hair care, skin cleansing and oral product lines.”

James Daniels, High Ridge’s former President and CEO who will join Tengram upon the closing of the transaction, said, “I’m thrilled to return to High Ridge and lead the Company through this new chapter in partnership with Tengram. During my previous tenure, my focus was to provide our retail partners and the consumers we serve with innovative, benefit-rich personal care products at a compelling value. My immediate priorities will be to reinvest in our team, strengthen the relationships across our supply chain, and ensure that customer service is once again priority one. I can’t wait for our brands to regain their competitive position in the marketplace, and embark, with Tengram, on identifying other growth brands to add to the platform when appropriate.”

“The acquisition of High Ridge’s haircare and skin cleansing brands concludes a competitive auction process, in which Tengram was able to utilize its long track record of success in both restructuring and growing brand value in the consumer sector to facilitate the best bid,” said William Sweedler, co-founder and Managing Partner at Tengram Capital Partners. “With our transaction, High Ridge Brands will have a flexible balance sheet to re-establish its market position and pursue potential growth opportunities. We plan to move quickly with Jim and his team to change the status quo, leverage the portfolio’s global recognition, and resume High Ridge’s growth.”

Brian Cooper, Principal at Tengram Capital Partners, said, “With planned organizational investments in all aspects of the business that touch our customers, Jim’s history and Tengram’s strong industry relationships, we believe we can unlock significant value as we set the Company up for long term success.”

“The strategic acquisition of these oral care assets highlights the tremendous value of the Ranir platform, and it underscores that there are numerous bolt-on opportunities that can advance Perrigo as a global self-care leader,” said Murray S. Kessler, Perrigo President and Chief Executive Officer. “It also demonstrates that Perrigo will remain disciplined and mindful of maximizing shareholder value as it proceeds with its portfolio reconfiguration plans.”

“We are once again capitalizing on our strategic pursuit of attractive growth opportunities aimed at enabling enhanced, affordable access to innovative oral self-care products,” said Rich Sorota, incoming Executive Vice President and President, Perrigo Consumer Self-Care Americas. “This acquisition provides us with well-established oral self-care brands that will contribute positively to our long-term growth objectives through new product innovation, leveraging our scale to increase distribution and expanding product reach through e-commerce. The traditional store brand landscape is evolving, and we are well-positioned to provide our retail partners with exclusive branded programs and product innovations that resonate uniquely with today’s consumer.”

DETAILS:

• Perrigo Company plc will acquire the High Ridge Brands oral care business and an affiliate of Tengram Capital Partners will acquire its hair and skincare businesses.
• Under the terms of the agreement, the consideration includes a cash payment of $120.5 million to High Ridge Brands and the assumption by the buyers of working capital and substantially all go-forward liabilities of the businesses, as well as certain cure costs associated with High Ridge’s existing business arrangements.
• At closing, High Ridge Brands and the buyers will enter into a mutual Transition Services Agreement (TSA), expected to span at least 12 months, in order to provide for a seamless transfer of the oral, skincare, and hair businesses.
• The transaction, which is expected to close in the first quarter of 2020, is subject to approval by the U.S. Bankruptcy Court for the District of Delaware and certain other closing conditions. A hearing to seek court approval for the transaction is scheduled for February 26, 2020.
• The business was formed as a private equity play by Brynwood Partners, in order to acquire Zest from Procter & Gamble in 2011 adding other companies along the way including White Rain, LA Looks, and Dr Fresh.
• Brynwood Partners sold the company to Clayton, Dubilier and Rice at a value of $415 million in 2016.
• Debevoise & Plimpton LLP and Young Conaway are serving as High Ridge’s legal counsel and Ankura Consulting Group is serving as its restructuring adviser. PJT Partners is also serving as its financial adviser.

HAIRCARE AND SKINCARE DETAILS:

• Tengram Capital Partners will acquire the haircare and skin cleansing business of High Ridge Brands, establishing a new platform investment for Tengram in a consumer-focused hair and skin category.
• The acquired portfolio includes iconic brands such as Zest, Alberto VO5, Coast, White Rain, LA Looks, Zero Frizz, Rave, Salon Grafix, and Thicker Fuller Hair, among others. These assets build upon and broaden Tengram’s existing beauty and wellness portfolio.
• In conjunction with the acquisition, Tengram also announced today that James Daniels, High Ridge’s former President and CEO at its original formation and who oversaw the company’s initial growth, will return in the same role upon the closing of the transaction.
• Dechert LLP served as Tengram’s legal counsel and Hilco Global provided valuation and strategic transition advisory services during the transaction.

ORAL CARE DETAILS:

• Perrigo Company reached a definitive agreement to acquire the oral care assets of High Ridge Brands for $113 million in cash.
• The size of this transaction once again demonstrates Perrigo’s commitment to transform to a consumer-focused self-care company and build shareholder value.
• The acquisition of these assets builds upon Perrigo’s July 2019 acquisition of Ranir, the world’s largest private-label oral self-care company.
• The deal includes leading children’s oral care value brand, Firefly, in addition to the Reach and Dr. Fresh brands.
• Sawaya Partners, LLC served as financial adviser, and Morgan, Lewis & Bockius LLP served as legal counsel to Perrigo.