Church & Dwight Acquires Hero Acne Patch Brand in $630 Million Deal

Church & Dwight has signed a definitive agreement to acquire the Hero Mighty Patch brand and Hero's other acne treatment products for $630 million, consisting of cash and Church & Dwight restricted stock.

Hero will be part of Church & Dwight’s specialty hair and skin portfolio which includes brands such as Nair and Flawless in hair removal, dry shampoo brand Batiste, and hair loss products Viviscal and Toppik.

Mighty Patch is the No. 2 brand in the acne category in the US and the No. patch brand in acne. The transaction, which is subject to customary closing conditions, is expected to close in the fourth quarter, according to Church & Dwight, No. 8 in Happi’s 2022 Top 50 Report.

Hero’s net sales for the trailing 12 months through June 30, 2022 were approximately $115 million. The products are currently only marketed in the US.

Church & Dwight CEO Matthew T. Farrell called Hero a “powerful addition” to its portfolio.

“The Mighty Patch brand is a problem/solution product with a strong position in a growing category. The total acne treatment category in tracked channels is approximately $700 million. The patch form has grown to 18% of the acne treatment category as more consumers transition away from lotions and ointments to a patch solution. The brand skews towards younger consumers and consistently has a high level of brand loyalty and repeat purchase,” he said.

Hero’s trailing twelve months EBITDA as of June 30, 2022 was approximately $45 million, with a 40% EBITDA margin. Church & Dwight expects to expand Mighty Patch’s limited distribution by leveraging its US retailer relationships and international footprint.

In addition to cash, approximately 10% of the purchase price will be conveyed to the founders—Ju Rhyu, Dwight Lee, and Andrew Lee—in restricted stock. The founders are expected to remain and continue to run the business while leveraging Church & Dwight’s scale and capabilities.

Leadership & Staff To Remain

Farrell said Church & Dwight intends to maintain Hero's New York CIty location and retain its employees. C&D is located just outside New York City in New Brunswick, NJ.

“Hero is nimble and asset light and should be an excellent fit at Church & Dwight,” Farrell said.

The acquisition meets C&D’s criteria—No. 1 or No. 2 brand in a category; asset-light; a growing brand; and gross margin accretive to the company.

“Acquisitions have been a key driver of Church & Dwight’s consistently strong shareholder returns,” said Farrell.

Church & Dwight acquired Therabreath, an oral care brand in Novemeber 2021.

“We are excited to combine a brand that people love with Church & Dwight’s expertise and scale to continue driving success and growth in the market. Our cultures are a strong complement to one another and we are ready to take Hero into the next chapter and beyond as part of the Church and Dwight family,” said Rhyu, co-founder/CEO of Hero.