Colgate-Palmolive Co. has agreed to pur-chase European oral care company GABA Holding AG, Switzerland. GABA is a privately-owned company with long-standing ties to the dental community and market leadership in the European pharmacy channel, company executives said. GABA products are professionally endorsed. The acquisition aims to strengthen Colgate’s oral care business in Europe.
“GABA is one of the few major privately-held toothpaste companies worldwide,” said Reuben Mark, chairman and chief executive officer, Colgate-Palmolive. “Looking back, we were able to improve our already strong Asian toothpaste business in 1985 when we formed a joint venture with the Hawley & Hazel oral care company. Similarly, in 1995 we acquired the Kolynos toothpaste franchise, materially strengthening our powerful Latin American oral care business. The GABA acquisition should have a similar effect on our overall European toothpaste business, where we are already No. 1.”
The acquisition is subject to Colgate acquiring more than 80% of outstanding GABA shares at closing. Included in the assets of the business to be acquired is $110 million net cash.
“GABA is an excellent strategic fit with Colgate’s high-margin global oral care leadership, and will help us as we methodically increase that leadership around the world,” insisted Mr. Mark. “This highly complementary business combination should further accelerate the growth of both Colgate and GABA brands while expanding our leadership positions throughout Europe.”
The acquisition is expected to have a dilutive effect of about 3% on total company earnings in 2004, an approximately neutral effect in 2005 and a positive effect on earnings anticipated from growth and efficiencies by 2006.
“GABA’s strength in the important European pharmacy channel complements Colgate’s leading presence in mass retail, and GABA’s therapeutic positioning complements Colgate’s multi-benefit product line,” Mr. Mark said. “Colgate will also benefit from GABA’s long-established relationships with the European dental community. GABA has the strongest dental detailing force in Europe and is the No. 1 recommended brand by dentists in (its) key markets.”