Helen of Troy Limited announced that one of its subsidiaries had acquired Recipe Products, Ltd., parent of the Curlsmith prestige haircare product range.
The total purchase consideration, net of cash acquired, was $150.0 million in cash, subject to certain customary closing adjustments. This implies a pre-synergy multiple of less than 10x estimated calendar year 2022 adjusted EBITDA, which compares favorably to Helen of Troy’s current Enterprise Value (EV)/TTM adjusted EBITDA3 multiple of approximately 15.0x. For the 2022 calendar year, net sales revenue is expected to be between $40 million to $42 million.
Curlsmith has become the most profitable brand in Helen of Troy’s portfolio, further augmenting the Beauty segment’s adjusted operating margin, which is the highest in the company. The acquisition is expected to be immediately accretive to consolidated and Beauty segment measures such as sales growth rate, gross profit margin, adjusted EBITDA margin, and consolidated measures such as adjusted diluted EPS, adjusted diluted EPS growth rate and cash flow from operations.
The company will discuss the transaction during its fourth-quarter fiscal year 2022 earnings call, which will take place on April 27, 2022.
Julien R. Mininberg, CEO, siad “We believe Curlsmith is an excellent fit with Helen of Troy, both strategically and financially. This transaction advances Helen of Troy’s strategy to invest in businesses that can accelerate profitable growth in categories where we can add value and leverage our scalable operating platform. It aligns with a key Phase II M&A objective of tucking in early-stage, fast-growing and disruptive innovators to complement our portfolio of Leadership Brands.
“Curlsmith expands our platform in prestige beauty to capitalize on the fast-growing textured hair market. Approximately 60 percent of U.S. consumers have curly or textured hair. Prestige textured haircare products are growing ten times faster than products for non-textured hair and twice as fast as mass-market textured hair products. Curlsmith is winning by empowering consumers with curly and textured hair to love the hair they have and simplify care.
“The business more than doubled in size between calendar years 2020 and 2021, and we expect it to continue to grow at a healthy double-digit rate. As our third transaction in Beauty so far in Phase II, Curlsmith will complement our Drybar, Revlon, and Hot Tools brands by broadening our range of offerings to consumers and professionals across the good, better and best segments and adding more prestige liquids to our portfolio. We see excellent upside potential for Curlsmith, and we expect to add significant value to it by capitalizing on our expertise in beauty and our shared services platform.
“In Beauty, we will immediately add capability through a much larger salesforce in brick-and-mortar and online, additional DTC capability, marketing, category development, appliance know-how, and an international go-to-market footprint. Once we complete the necessary integration activities, we expect to add further value to the business and achieve meaningful synergies by leveraging Helen of Troy’s highly capable global sourcing, distribution, and back-office shared service capabilities.”
Michal Berski, Curlsmith founder and CEO, added: “Helen of Troy has a talent for spotting exceptional Indie brands that do things differently and turbocharging them. So, from the get-go, we knew that Curlsmith would be a compelling strategic fit. As a market-leading textured haircare brand, Curlsmith both complements and brings a new dimension to their already enviable prestige haircare portfolio.”
Raymond James acted as exclusive financial advisor to Curlsmith.
Helen of Troy’s brands includes OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, and Drybar.
Photo courtesy Curlsmith