Corporate carve-outs were one of the avenues that sources told us could be a rich seam of deals in 2024 and there are signs that’s proving true, with Yellow Wood Partners portfolio company Suave Brands mining a consumer healthcare company for a lip-care company.
We then finish with a look at a report by thinktank Carbon Tracker which suggests that the energy transition could make a serious dent in the cashflows of North Sea oil and gas companies – several of which have private equity backing.
Corporate carve-outs were one of the themes to watch for 2024, PAI Partners’ Frédéric Stévenin told us in an outlook piece in December, and it looks like that prediction is starting to come true.
Yellow Wood Partners portfolio company Suave Brands has agreed to acquire lip-care brand ChapStick from UK-based consumer healthcare company Haleon for around $510 million.
Suave itself was a carveout. Yellow Wood founded the Chicago-based personal care company after acquiring the Suave brand from Unilever in 2023.
Haleon is getting pre-tax cash proceeds of around $430 million, plus a passive minority interest in Suave that was valued at around $80 million at time of signing.
ChapStick generated £112 million ($142.5 million; €130.8 million) of revenue in 2023.
“Chapstick has the highest brand awareness in lip care, as well as the strongest purchase conversion among all brands in the category,” said Dana Schmaltz, partner at Yellow Wood, in a statement. “Similar to Suave, ChapStick will benefit from Suave Brands Company’s leadership, setting the brand up for continued innovation and growth driven by increased consumer marketing investments, as well as a more focused sales approach.”
Yellow Wood isn’t the only private equity firm investing in the personal care sector this year. Bridgepoint announced an investment in RoC Skincare for what PE Hub Europe understands was around $500 million, while Vendis Capital invested in Skins Cosmetics.
We also did a roundup of some of last year’s cosmetics deals – you can check that out here.
Speaking of Bridgepoint, the firm has made another investment this morning, this time in the IT services sector.
Kerv’s existing backer LDC will roll over part of its investment alongside Bridgepoint and management.
London-based Kerv employs around 700 people in the UK, Spain, Portugal, France, Switzerland, India, Hong Kong, Singapore and the US, serving public and private sector mid-market and enterprise customers. It has around 30 percent annual revenue growth and is reaching a revenue run rate of over £100 million and an EBITDA run rate of £20 million.
“Their approach to growth, combining leading organic development via exposure to high-growth elements of the technology sector supplemented with strategic acquisitions, positions them strongly for the future,” said Robin Lawson, partner at BDC. “With the core Kerv platform now built, BDC’s support will help Kerv to expand its product sales, cross-selling opportunities and an increasing focus on industry verticals.”
Kerv was founded in 2020 when LDC backed executive chair Alastair Mills and group MD Mike Ing to acquire and merge three companies.
(Note: Bridgepoint owns PEI Group, the publisher of PE Hub Europe.)
Oil be damned?
Private equity firms with North Sea oil and gas portfolio companies could be at risk from the energy transition, according to a new report from thinktank Carbon Tracker.
The report suggests that cashflow from such companies could fall by more than 60 percent below expectations if global warming is kept at 1.7°C.