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Reckitt Benckiser to Sell E45 Skincare to Karo Pharma for $268 million

January 14, 2022 BeautyMatter
January 14, 2022
E45

Reckitt Benckiser has struck a deal to sell E45 skincare and related sub-brands to Swedish Karo Pharma for £200 million ($268 million).

WHO: E45 cream was created in 1952 by a Boots chemist in response to a customer request for a product that would soothe and protect dry and itchy skin. The brand has evolved into a range of skincare products developed for different skin types to protect and maintain skin health.

Karo Pharma delivers smart choices for everyday healthcare. They own and commercialize branded, original over-the-counter products and prescription medicines. Karo’s products are available in more than 60 countries, with Europe and the Nordic region as their core markets. Karo Pharma is headquartered in Stockholm, Sweden, and listed on Nasdaq Stockholm Mid Cap.

Reckitt Benckiser Group PLC, trading as Reckitt, is a British multinational consumer goods company headquartered in Slough, England. A producer of health, hygiene, and nutrition products, the company was formed in March 1999 by the merger of British company Reckitt & Colman plc and Dutch company Benckiser NV.

WHY: For Reckitt, the deal is another step forward in a plan to manage its portfolio for higher growth. The acquisition supports Karo's strategy of expanding commercial operations in major European markets, scaling up Karo's operations in the UK while strengthening its position in the dermatology category.

IN THEIR OWN WORDS: Chief Executive Laxman Narasimhan said, “As we shift from a brand-led to a category-led growth strategy, we are focusing on high growth categories with brands we can stretch into new places and spaces to support our medium-term growth ambitions, including 4 percent – 6 percent growth in Health (business)."

"With its proven, dermatological expertise and unrivalled UK leadership position in skin health, E45 is an exciting addition to our Karo brand portfolio. E45 deepens and scales our European presence in dermatology, synergising strongly with our Locobase, Alfason and Decubal brands. We see compelling opportunities to unlock value; enabling E45's shift from off-line to omnichannel and better serving consumers with a winning pipeline of innovation," says Anna Hale, CMO of Karo.

"We are pleased to add another synergistic brand acquisition to Karo's portfolio. E45 is a unique brand, which is trusted by consumers and represents quality and consistency. The brand will strengthen our platform in the UK market, as well as within the dermatology category, fully aligned with our strategy. Further, we will look to fuel the brand's growth via increased A&P and via injecting e-commerce capabilities recently accessed via the Sylphar transaction," says Christoffer Lorenzen, CEO of Karo.

DETAILS:

  • Reckitt Benckiser will sell E45 skincare and related sub-brands brand to Karo Pharma for £200 million ($268 million) in a deal expected in the second quarter of 2022.
  • The debt-financed purchase does not include any factories. Reckitt will provide service and manufacturing support to Karo for a limited time following the completion of the deal. Karo intends to transfer production to a new third-party contract manufacturing partner.
  • The E45 brand achieved a combined net revenue of £43 million in 2021.
  • Last February, Reckitt sold its Scholl footcare business to private equity firm Yellow Wood Partners.
  • In January 2021 Reckitt Benckiser acquired Queen V, a feminine sexual wellness brand. In March, they led a funding round in Visage Lines Personal Care, the Indian company that owns popular men's grooming brand Bombay Shaving Company.
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