Chattem, Inc.
(NASDAQ: CHTT), the Chattanooga-based leading marketer and manufacturer of branded consumer products, announced today that it has signed a definitive agreement to purchase Selsun Blue(R), a leading medicated dandruff shampoo, from Abbott Laboratories (NYSE: ABT) for $75 million, plus inventories.
A portion of the manufacturing of Selsun Blue is to be shifted to Chattanooga.
Selsun Blue's 2001 worldwide net sales were approximately
$41 million, and the brand is marketed in both the United States and in approximately 50 foreign countries.
The transaction is scheduled to
close during Chattem's second quarter of 2002.
The acquisition includes worldwide rights (except India) to manufacture, sell and market Selsun Blue plus related intellectual
property and certain manufacturing equipment.
Financing for the transaction will be provided by Chattem's approximately $35 million of cash and a new credit facility led by
Bank of America.
Selsun Blue was launched in 1953 as a prescription drug and in 1974 was introduced as an over-the-counter medication. The over-the-counter product contains 1% selenium sulfide, while the prescription strength, which constitutes a small portion of domestic sales but is well known by dermatologists, contains 2.5% selenium
sulfide. Approximately half of foreign sales are the 2.5% formula.
Selsun Blue is widely recognized by consumers both domestically and
internationally and has a strong reputation for effectiveness, officials said.
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 will also
rely on Abbott's sales force or distributors to market and sell Selsun Blue in those countries where Chattem does not already have a
presence. Chattem expects to take over the international sales and
marketing effort in most markets in 3-9 months.
Chattem anticipates that the ownership of Selsun Blue internationally should create the
opportunity to introduce certain of its other brands in countries
where they are not currently sold.
The transaction should immediately boost sales and EBITDA and be
accretive to Chattem's earnings per share, officials said.
In its fiscal 2002 first quarter earnings release, the Company will give guidance as to the anticipated increases to sales, earnings per share and EBITDA for the balance of fiscal 2002 and fiscal 2003 that will result from the ownership of Selsun Blue.
Chattem, Inc. is a leading marketer and manufacturer of branded
consumer products including health, beauty, and skin care products.
The Company's products target niche market segments and are among the
market leaders in their respective categories across food, drug and
mass merchandisers. OTC health care products include: the Gold Bond(R)
line of medicated powders, creams and lotions; topical analgesics,
including Icy Hot(R), Flexall(R), Sportscreme(R), Aspercreme(R),
Arthritis Hot(R), Capzasin-P(R) and Capzasin-HP(R); menstrual internal
analgesics Pamprin(R) and Premsym(R); and Herpecin-L(R) lip balm. Skin
and beauty care brands include: Mudd(R) facial masques, pHisoderm(R)
acne and facial washes, Sun-In(R) hair lightener, Ultra Swim(R)
shampoo and conditioner, and Bull Frog(R) sunscreen products.
Nutritional supplements include: the Sunsource(R) brand including
Garlique, Rejuvex, Propalmex, New Phase and Omnigest-EZ. Chattem also
markets Dexatrim Natural(R), Dexatrim Results(R) and Ephedrine-free Dexatrim Natural(R) and Dexatrim Results for appetite suppression.
Chattem conducts a portion of its global business through subsidiaries
in the United Kingdom and Canada.