Consumer healthcare products provider Haleon (NYSE:HLN) has agreed to sell its ChapStick brand to Suave Brands in a $510 million deal. Suave is a portfolio company of private equity firm Yellow Wood Partners.
ChapStick, a household name, is the number one brand by volume in the lip care category. Yellow Wood set up Suave Brands Company last year to acquire the Suave brand from Unilever (NYSE:UL). The addition of ChapStick promises to further boost the company’s personal care brand portfolio. Other notable consumer brands under the Yellow Wood umbrella include Dr. Scholl’s, Scholl International, Beacon Wellness, EcoTools, Byoma, and Isle of Paradise. Notably, the private equity major announced the acquisition of the Elida Beauty portfolio from Unilever in December.
The M & A deal includes a cash component of $430 million. Haleon plans to use the funds raised from this transaction to pare down its debt. The company will also gain a passive minority interest valued at $80 million in Suave Brands. The transaction, anticipated to close in the second quarter of 2024, is also expected to help Haleon simplify its business.
Haleon was formed by combining the consumer health units of GSK and Pfizer (NYSE:PFE) in 2019. Earlier this month, GSK (NYSE:GSK) raised nearly $1.24 billion by offloading a partial stake in Haleon. Following this sale, GSK’s ownership in Haleon now stands at 4.2%. However, Pfizer still holds a 32% stake in Haleon.
Is HLN a Good Stock to Buy?
Morgan Stanley’s Rashad Kawan, the sole analyst tracking Haleon, recently initiated coverage on the stock with a Buy rating and a $9 price target. Following a nearly 8% drop in the company’s share price over the past six months, Kawan’s price target points to a 12.2% potential upside in HLN stock.
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