Colgate-Palmolive is buying its way into the professional beauty world.
The owner of Softsoap, Speed Stick and Tom’s of Maine is buying PCA Skin and EltaMD in two separate transactions. Combined, Colgate said the companies have about $100 million in revenue. Industry sources suggested it is a nearly even split, with each company generating around $50 million in sales. Terms of the deal were not disclosed.
PCA Skin, based in Scottsdale, Ariz., makes medical grade skin-care products that are sold through dermatologists, plastic surgeons and aestheticians. The business has been backed by Norwest Venture Partners for roughly five years. During that time, Michael Lorrain joined the business from L’Oréal’s Active Cosmetics Division as chief executive officer of PCA. The business also hired Chris Payne as chief marketing officer in 2016.
PCA is well-known for its peels and retinol products, and recently added Massage Envy to its distribution list.
“As far as channels, [PCA has] always been a very focused aesthetician brand,” said Sonya Brown, managing partner at Norwest. “Thinking about dermatologist and plastic surgery offices was a small percent, but that was probably the fastest-growing side of the business as we continued to focus and build a salesforce.”
EltaMD sells sunscreen and skin-care products through doctors offices. The brand was acquired by Prairie Capital as part of the private equity firm’s 2012 acquisition of Swiss-American Products. Prairie declined to comment for this story.
For Colgate, the two deals mark its first move into professional skin care. Colgate’s beauty and personal-care offerings include deodorant brands and Tom’s of Maine, which Colgate acquired in 2006 and makes lip balm and body lotions in addition to toothpaste and deodorant.
“Adding a [fourth] pillar of growth — oral care, personal care, pet nutrition and now professional skin care — is a smart move and we believe this is a niche that Colgate can grow at a reasonable cost — given lack of exposure to larger CPG companies,” wrote RBC Capital Markets analyst Nik Modi in a note Monday.
“PCA Skin and EltaMD form an exciting combination for Colgate’s entry into the professional skin-care category,” said Ian Cook, Colgate chairman, president and chief executive officer. “These high-growth, high-margin brands will strengthen our global personal-care business. Their complementary product portfolios and sales forces, strong professional support and similar distribution channels will advance Colgate’s presence in the premium global skin care category. Furthermore, these businesses will benefit from Colgate’s decades long legacy of working with professional experts to deliver recommendations that benefit their patients.”
Wells Fargo Securities LLC advised Colgate on the acquisition of EltaMD. Financo and Houlihan Lokey advised PCA.