Swander Pace Capital has acquired the personal- and home-care assets of Watkins Inc.
For the deal, the private equity firm is carving out J.R. Watkins Personal Care & Household into a separate company — the other part of the Watkins business focuses on spices. J.R. Watkins sells products including Coconut Liquid Hand Soap, Hand Cream with Shea and Cocoa Butters, Aloe & Green Tea and Liquid Dish Soap in Lemon, sold at retailers like Target, Wal-Mart and Walgreens, as well as Amazon. Terms of the transaction were not disclosed.
J.R. Watkins was established in 1868 as an apothecary and gradually grew its business beyond personal care into other categories. J.R. Watkins chief executive officer Mark Jacobs will stay on as vice chairman of the company’s board, which is now headed by Heather Thorne, managing director at Swander Pace.
J.R. Watkins personal-care and home-care assortments center around natural ingredients, a proposition that has attracted buyers of other beauty and personal-care companies recently. Other examples include BWX’s acquisitions of Mineral Fusion and Andalou Naturals, and Unilever’s deal for Sundial.
The Swander Pace deal came about after Watkins put its entire business up for sale several years ago. After getting to know the management team back then, Swander Pace asked to buy just part of the company, according to Thorne. The firm has invested in other beauty and personal-care companies, including Glo Skin Beauty and Gilchrist & Soames.
“We proposed the idea of just buying the personal-care assets and leaving the manufacturing plant behind with the food side of the business,” she said. “We acquired just the brand [intellectual property] and the other non-manufacturing assets around the personal-care and home-care [businesses], and did a carve out from Watkins Inc.…whose guys will keep manufacturing and the spices side of things.”
“The consumer base have loved it and are super loyal to it,” Thorne said. “That’s what we’re looking for, is a company that has excellent product and a really loyal but small consumer base — then we can expand that.”
“Amid changing customer tastes, J.R. Watkins is in a unique position to increase its market share in the natural home, bath and body-care business, said Mark Poff, managing director at Swander Pace Capital. “We are confident that the investment will put the company in the best possible position to expand upon its already-successful legacy.”
Under Swander Pace, the plan is to hire a management team, fill out distribution, grow into new product categories and ramp up marketing spend. Industry sources said after a growth plan is enacted, the brand could grow to do more than $100 million in sales.
“We’re going to be focused on building the infrastructure of the business and the new management team,” Throne said. “There are a lot of distribution opportunities within the U.S.…It’s got a strong core of excellent customers, but there are some new customers [we could go after].”
Right now, J.R. Watkins personal-care assortment is centered around hand soaps and lotions, and the opportunity exists to build from there, Thorne said. “Personal care is such a massive category — there are a lot of places to grow, think the rest of the body and the head.”
BMO Capital Markets advised Watkins on the deal.