Boston-based private equity firm Yellow Wood Partners is adding ChapStick to its portfolio, acquiring the brand in a $510 million deal from consumer health company Haleon.
WHO: ChapStick invented the lip care category in the 1880s with the launch of a now-iconic lip balm that made ChapStick a household name. For more than a century, ChapStick has added products to its portfolio with innovative new ingredients, skincare benefits, and flavors. Today, ChapStick is the leader in lip care and synonymous with the product category—it is the #1 brand by volume and has over 80% brand awareness.
Haleon, spun off by drugmaker GSK Plc about 18 months ago, is a global leader in consumer health. Its product portfolio spans five major categories—Oral Health, Pain Relief, Respiratory Health, Digestive Health and Other, and Vitamins, Minerals and Supplements (VMS). Long-standing brands include Advil, Sensodyne, Panadol, Voltaren, Theraflu, Otrivin, Polident, Parodontax, and Centrum.
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 that sell into a variety of consumer channels, including mass, drug, food, specialty, value, club, and e-commerce. Yellow Wood's Consumer Operating DNA investment and operating strategy is based on utilizing the firm's functional operating resources to help maximize brand performance by driving organic growth and increasing operating efficiencies. The firm seeks to acquire additional brands to create new platform investments and accelerate growth in its limited number of platform portfolio companies. Its portfolio consists of Dr. Scholl's and Scholl International, Beacon Wellness Brands, led by its anchor brand PlusOne, beauty brands Real Techniques and EcoTools, Byoma, Isle of Paradise, Tanologist, and TanLuxe.
WHY: Haleon is working to pare down its portfolio and plans to use the proceeds of the transaction to pay down debt.
IN THEIR OWN WORDS: Brian McNamara, Chief Executive Officer of Haleon, said, “While ChapStick is a great brand, much loved by consumers around the world, it is not a core focus for Haleon. Selling the brand allows us to simplify our business and pay down debt more quickly. We’re confident the brand will continue to thrive under its new ownership.”
Suave Brands Company Chief Executive Officer Daniel Alter said, "The Yellow Wood team established Suave Brands Company in May 2023 to acquire the Suave brand from Unilever. We saw the opportunity to grow Suave with a more focused management approach while also creating the corporate infrastructure to acquire and manage additional personal care brands across multiple categories to drive synergies across the platform. We are excited to add ChapStick, another leading brand with deep equity and history, into our platform. At Suave Brands Company, our management team is focused on building a platform of category leading brands that consumers love while working with our retail customers and manufacturing partners to grow the brands. We look forward to continuing to build Suave Brands Company by identifying additional personal care brands to add to the portfolio.”
Dana Schmaltz, Partner at Yellow Wood Partners, commented, "ChapStick is the #1 lip care brand in the mass, drug, food and convenience store channels. ChapStick products are purchased by one out of every five households in the United States; consumers love the brand. ChapStick has the highest brand awareness in lip care, as well as the strongest purchase conversion among all brands in the category. Similar to Suave, ChapStick will benefit from Suave Brands Company's leadership, setting the brand up for continued innovation and growth driven by increased consumer marketing investments, as well as a more focused sales approach. We look forward to completing this transaction in the first half of 2024.”
Tad Yanagi, Partner at Yellow Wood Partners, added, "ChapStick will be Yellow Wood's fifth corporate carveout transaction in the past four years. The firm prides itself on having become a trusted partner to CPG companies to carve brands out and set them up for their next stage of growth. We appreciate Haleon's collaboration on all levels and look forward to working with them to complete the carveout expeditiously."
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