Henkel Accelerates M&A Pace With $1.3 Billion Spotless Deal

Henkel AG agreed to buy France’s Spotless Group SAS for 940 million euros ($1.3 billion) as the maker of Loctite glue and Persil detergent overcame concerns about overpriced deals to seal its second takeover in a week.

The deal to acquire the laundry aid, insect control and household-care company from BC Partners Holdings Ltd. should be completed by the first quarter, pending regulatory approval, Dusseldorf-based Henkel said in a statement. Henkel shares were little changed at the open of trading in Frankfurt.

The Spotless transaction is a sign Chief Executive Officer Kasper Rorsted is willing to push ahead with deals in a marketplace for assets that he has considered overvalued. After hesitating to use the 4 billion euros in cash available for acquisitions, Henkel on June 2 announced a 270 million-euro transaction to acquire three U.S. hair companies.

“We are very encouraged to see Henkel accelerating the pace of acquisitions as of 2014 and believe it could continue,” Paris-based Raymond James analyst Hermine de Bentzmann, who rates Henkel outperform, said in a note to clients. “The group has room to leverage these new brands rapidly both locally and also internationally.”

The deal for Spotless, which is based in the Parisian district of Neuilly-sur-Seine, is the Danish executive’s biggest deal since taking the reins in April 2008, according to data compiled by Bloomberg.

Spotless had sales of about 280 million euros in the last fiscal year and about 470 employees, Henkel said in a separate e-mailed presentation. The 940 million-euro takeover, which is all-cash and includes debt, represents 12.1 times earnings before interest, taxes, depreciation and amortization.

Accretive

Henkel has a target of increasing revenue to 20 billion euros in 2016 from 16.5 billion euros last year, with half of sales coming from markets such as Latin America or the Asia-Pacific region. In a further step toward that goal, it will also be absorbing SexyHair, Alterna and Kenra acquired from TSG Consumer Partners this month, adding hair care and styling products in the world’s single biggest market for those offerings.

“By acquiring the Spotless Group (SPO), we will strengthen our market position and enter highly profitable growth segments,” the CEO said in the statement. “The transaction will be immediately accretive to earnings.”

About half of Spotless’s revenue stems from laundry aids such as the Dylon fabric dye brand and Cebralin stain remover. A further 25 percent comes from insect-control products such as Catch and the remaining sales from household-care products including Vim.

PE Project

BC Partners acquired Spotless Group in 2010 for 640 million euros, according to the London-based private equity firm’s website. Previous owner Axa Private Equity created the company in 2005 after buying homecare-product maker Eau Ecarlate and then adding six cleaning-product brands in Italy, the U.K. and Ireland.

Spotless “has an exciting potential for future profitable growth within Henkel,” BC Partners Managing Partner Jean-Baptiste Wautier said in an e-mailed statement.

Henkel traded at 85.30 euros as of 9:07 a.m., an increase of 0.1 percent.

The private equity firm was advised by JPMorgan and Rothschild & Cie on the deal. Henkel declined to identify its advisers.

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Andrew Noel, Robert Valpuesta

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