Chattem to Buy Selsun Blue

Chattem, Inc., Chattanooga, TN, has signed a definitive agreement to purchase Selsun Blue, a leading medicated dandruff shampoo, from Abbott Laboratories for $75 million plus inventories. Selsun Blue’s 2001 net sales were approximately $41 million, and the brand is marketed in both the U.S. and in nearly 50 countries worldwide. The acquisition is scheduled to close during the second quarter of 2002 and includes worldwide rights (except India) to manufacture, sell and market Selsun Blue plus related intellectual property and certain manufacturing equipment, executives said.

Selsun Blue was launched in 1953 as a prescription drug and in 1974 was introduced as an over-the-counter (OTC) medication. The OTC product contains 1% selenium sulfide, while the prescription strength, which constitutes a small portion of domestic sales, contains 2.5% selenium sulfide. Half of foreign sales use the 2.5% formula.

Abbott Laboratories will initially manufacture the product for Chattem under a contract manufacturing arrangement. Chattem expects to move certain production to its Chattanooga, facilities within 12-24 months following closing. Abbott or manufacturers under contract to Abbott will manufacture the product internationally for Chattem until Chattem enters its own agreements with foreign contract manufacturers, also expected to take 12-24 months.

Chattem expects to take over the international sales and marketing efforts in most markets in 3-9 months. Executives hope this will allow Chattem the opportunity to introduce brands in countries where Chattem products are not currently sold.