Acquisitions appear to be in the air this month. Last week, Colgate-Palmolive Company (NYSE: CL) announced it plans to acquire Hello Products LLC, a premium oral care brand that sells a variety of dental products for everyone from three-month-old infants and toddlers to teens and adults. Available in the United States, Hello sells toothpaste, mouthwash, toothbrushes, dental floss, teething gel and other products in retail stores, online and via subscription. Their products use natural ingredients and are not tested on animals.
Hellos products appeal to a younger audience and to those who are interested in using natural personal care products. Their About Us page describes their focus this way:
We think its time personal care was, well, personal. Relevant. Beautiful. Delicious. Friendly. And as natural as we can make it, says Hello. Were on a mission to make the world a friendlier place, starting with your mouth. Hello is a new kind of naturally friendlyTM oral care, created by a small, independent crew using thoughtful ingredients so delicious youll rush to brush. For reals.
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According to Colgates January 23 announcement, the acquisition will be financed with cash and debt. Terms of the deal were not disclosed. The deal is expected to close no later than February 2020. Hello founder Craig Dubitsky and CEO Lauri Kien Kotcher will continue to lead the company.
We are excited to welcome Hello to the Colgate family and are especially pleased that Craig and Lauri will continue in their leadership roles. We have great respect for the Hello team and their impressive product line, and value the strong connection they have made with younger consumers. With its distinct on-trend positioning, Hello is a terrific complement to our Colgate and Toms of Maine brands, and we look forward to supporting its continued growth and success, said Noel Wallace, Colgate president and CEO.
Dubitsky and Kien Kotcher also commented on the deal.
Colgate is the ideal partner for Hello with a like-minded commitment to the best consumer oral health, the environment and our communities, said Dubitsky.
Seeing how they have helped other companies grow and thrive in their portfolio, we are even more excited to join forces, Kien Kotcher said.
There are a few things about Hello that we love. First, they are very transparent about their products and pricing on their website. It includes a full product line-up, and their FAQs describe all of the ingredients, why they are chosen and how they help with oral care. Second, they address the dreaded foro (fear of running out) by making their products available via subscription. Subscriptions are flexible. Subscribers can choose their products and frequency (every one, two or three months). Hello says the average tube of their toothpaste lasts about eight weeks, but this varies by user.
The price of toothpaste is the same for subscriptions as it is for a retail purchase, but each tube comes with a free toothbrush valued at $3.99 each. Subscribers can also add products from their online Hello shopping cart to arrive along with their subscriptions. Combined with the clean design of the website, easy navigation and upbeat, friendly attitude, we can see Hellos appeal.
Similar to Procter & Gambles recent acquisition of Billie, the acquisition of Hello by Colgate-Palmolive makes a lot of sense. The deal gives Colgate the chance to introduce a new product line that has already proven successful and that appeals to a new demographic the more traditional Colgate may not be able to reach. The subscription component also adds recurring revenue to Colgates bottom line, diversifying revenue streams. By leaving Hellos current management in place, Colgate can support Hellos growth, while Hello gets the opportunity to scale its operation and gain additional exposure from Colgates broad consumer reach. This seems to be a great opportunity for both companies to benefit.