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Tom’s of Maine, one of the natural product industry’s oldest and most successful companies, has announced that it will be sold to the Colgate-Palmolive Company. The sale is reported to be structured as an all-cash acquisition of 84% of the outstanding shares of Tom’s for a total price of approximately $100 million. The final price of the sale is subject to adjustment at closing, which is reportedly to take place in the second quarter of this year. The Chappell family will retain 16% of the shares in the company. Tom Chappell, Chairman of the Board and CEO of Tom’s, will continue with the company. Published reports state that the company will continue its operations in its plant and offices in Kennebunk, Maine.1
Tom’s was founded by Tom and Kate Chappell in 1970 as a natural cosmetic company. The company’s product range eventually focused on oral care products, chiefly several flavors of toothpaste and mouthwash containing all natural ingredients.1 Such natural toothpaste flavors include apricot, cinnamint, fennel, and gingermint, among others.2 According to a USA Today article, Tom’s of Maine had annual sales of $50 million at the time of Colgate’s acquisition.3
In a press release posted on the Colgate Web site, Tom and Kate Chappell were quoted as saying, “We chose Colgate as our partner because they have the global expertise to help take Tom’s of Maine to the next level. Just as importantly, we see Colgate as an excellent fit with our own cultural values. Colgate has a commitment to product excellence, to global efforts to promote oral health, and has a 200-year history of caring for consumers and for giving back to the community. We are excited by Colgate’s desire to continue Tom’s of Maine leadership and heritage in natural care.”4
According to the Colgate press release, the U.S. market for natural oral and personal care products is valued at $3 billion and growing 15% per year. Tom's of Maine gives Colgate the opportunity to enter this fast growing health and specialty trade channel where Tom's toothpaste is the clear market leader, commanding 60% share of that channel. “This acquisition allows Colgate to strongly enter a completely new channel of distribution and establishes us as the only global oral care company in that channel,” said Ian Cook, Colgate’s President and Chief Operating Officer, in the press release. “This bodes well for additional opportunities in other high margin categories such as personal care…. With gross profit margins a full ten percentage points higher than Colgate's margin, Tom's of Maine is a logical acquisition as we continue to prioritize our global oral and personal care categories."4
Tom’s of Maine will now be run as a stand-alone unit of Colgate, much like Colgate’s Science DietŪ pet food line. Packaging of Tom’s of Maine products will not identify them as a Colgate subsidiary.3
Sources:
1. Nutrition Business Journal. NBJ's Weekly News Update, March 23, 2006.
2. Toothpaste Flavor Guide. Tom’s of Maine Web site. Available at: http://www.tomsofmaine.com/toms/flavor_guide.asp. Accessed March 31, 2006.
3. Colgate expands reach of quirky toothpaste. USA Today; March 21, 2006.
4. Colgate purchasing Tom’s of Maine; enters fast-growing natural products segment [press release]. Company News. Colgate Web site. Available at: http://investor.colgate.com/pressroom/pr_releaseDetail.cfm?ReleaseID=190765&ReleaseType=Company&ReleaseDate={ts%20'2006-03-21%2000:00:00'}. Accessed March 31, 2006.
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