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Aug-2007 |
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Energizer buys Playtex and launches new Schick products
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With an acquisition and some solid profits, Energizer (ENR) is sparking Wall Street's interest despite its direct battle with consumer goods giant Procter & Gamble (PG). Energizer, primarily a battery maker, also owns the Schick razor brand. It's trying to buy feminine care products maker Playtex (PYX). The merged company would compete against giant Procter & Gamble, including its huge Duracell division, in nearly every one of its product areas.
On Aug. 13, Energizer shares surged after SunTrust Robinson Humphrey analyst William Chappell upgraded the stock. Chappell outlines many reasons for his bullish outlook. For one, Energizer is gaining market share against competitors Duracell and Spectrum Brands (SPC), which makes Rayovac batteries. Schick is doing well despite new product launches from Procter & Gamble's Gillette. Based on some research-and-development expenses from late last year, Schick may be coming out with some new, exciting shaving products, Chappel says.
Plus, the analyst is optimistic about the Playtex deal. Chappell writes: "The real reason to own the stock over the next two years is the opportunity from the pending Playtex acquisition." Many are hoping Energizer, which is distributed in 150 countries, will push Playtex's products into dozens of new markets.
However, even with all the positives, there are reasons to be skeptical. Bear Stearns (BSC) analyst Peter J. Barry calls Energizer a Procter & Gamble "wannabe," and that's not a compliment. "We continue to believe that Energizer will be hard pressed to match Procter & Gamble's deep pockets and significant scale," Barry wrote last month.
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Author: Mark Heitner
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Date create: Aug-14-2007
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Comments(13)
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Energizer buys Playtex and launches new Schick products
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How do you get synergies from combining a battery manufacturer with bras and razors? Expertise in one consumer brand does not necessarily translate. Understanding women’s fashion is different from understanding razors and batteries. The Playtex acquisition is not an obvious winner.
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With an acquisition and some solid profits, Energizer (ENR) is sparking Wall Street's interest despite its direct battle with consumer goods giant Procter & Gamble (PG). Energizer, primarily a battery maker, also owns the Schick razor brand. It's trying to buy feminine care products maker Playtex (PYX). The merged company would compete against giant Procter & Gamble, including its huge Duracell division, in nearly every one of its product areas.
On Aug. 13, Energizer shares surged after SunTrust Robinson Humphrey analyst William Chappell upgraded the stock. Chappell outlines many reasons for his bullish outlook. For one, Energizer is gaining market share against competitors Duracell and Spectrum Brands (SPC), which makes Rayovac batteries. Schick is doing well despite new product launches from Procter & Gamble's Gillette. Based on some research-and-development expenses from late last year, Schick may be coming out with some new, exciting shaving products, Chappel says.
Plus, the analyst is optimistic about the Playtex deal. Chappell writes: "The real reason to own the stock over the next two years is the opportunity from the pending Playtex acquisition." Many are hoping Energizer, which is distributed in 150 countries, will push Playtex's products into dozens of new markets.
However, even with all the positives, there are reasons to be skeptical. Bear Stearns (BSC) analyst Peter J. Barry calls Energizer a Procter & Gamble "wannabe," and that's not a compliment. "We continue to believe that Energizer will be hard pressed to match Procter & Gamble's deep pockets and significant scale," Barry wrote last month.
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Author: Mark Heitner
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Date create: Aug-14-2007
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Comments(6)
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From Options Backdaters to M&A Targets: The Impact of the Options Scandal on M&A
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As if due diligence wasn’t difficult enough, now there is the issue of whether firms properly accounted for backdating of options for executives. Backdating of options is not, per se, illegal so long as the company’s procedures were properly recorded, as we learn from a recent article by Steve Rosenbush in Business Week Online, August 1, 2006 (excerpt below). Firms that have had accounting problems have been acquired a lower price. Other firms with accounting problems are financially weakened to the point of becoming acquisition targets.
On July 31, computer-memory maker SanDisk (SNDK) announced that it would acquire smaller rival M-Systems (FLSH) of Israel for $1.35 billion in stock. From a strategic standpoint, it's a logical merger between two players in complementary businesses. Both companies make flash memory that stores digital images, music, and more. But SanDisk is known for removable cards, while M-Systems concentrates more on the memory that's embedded in wireless phones, MP3 players, and other devices [see BusinessWeek.com, 8/01/06, "Flash Free-for-All?"].
The deal stands out in another important respect, however. M-Systems is one of more than 60 companies that have been caught up in the ever-widening scandal over the backdating of options. In most cases, the companies awarded stock options to executives at advantageous prices, and they are now investigating whether the disclosure and accounting for those awards was proper.
Now, it looks like some of the companies involved in backdating may become takeover targets. M-Systems is the second company touched by the scandal in as many weeks that has agreed to be acquired. On July 25, computer giant Hewlett-Packard (HPQ) announced that it would buy software maker Mercury Interactive (MERQ) for $4.5 billion in cash [see BusinessWeek.com, 7/29/06, "Mercury's Star Rises"]. Before the deal, Mercury's shares had been in a prolonged slump, after the company had disclosed its own backdating issues and the departure of its chief executive.
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Author: Mark Heitner
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Date create: Aug-1-2007
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Comments(16)
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