Bulletin: Church&Dwight's Acquisition Of Flawless Will Temporarily Increase Leverage, But Not Enough To Change Expectations

CHICAGO (S&P Global Ratings) March 28, 2019--S&P Global Ratings today said that Church&Dwight Co. Inc.'s (C&D; BBB+/Stable/A-2) planned acquisition of women's electric hair removal brand Flawless for $475 million, plus a contingent earn out of up to $425 million, will temporarily increase its pro forma leverage. Nonetheless, our expectation that the company will reduce its leverage below 2x before the end of 2019 remains unchanged and our ratings on the personal care and household products provider are unaffected by the announcement. C&D will fund the $475 million up-front purchase price mostly with bank debt. Including the earn out, we estimate that the transaction will increase the company's pro forma adjusted leverage to about 2.4x from about 1.9x as

...CHICAGO (S&P Global Ratings) March 28, 2019--S&P Global Ratings today said that Church & Dwight Co. Inc.'s (C&D; ###+/Stable/A-2) planned acquisition of women's electric hair removal brand Flawless for $475 million, plus a contingent earn out of up to $425 million, will temporarily increase its pro forma leverage. Nonetheless, our expectation that the company will reduce its leverage below 2x before the end of 2019 remains unchanged and our ratings on the personal care and household products provider are unaffected by the announcement. C&D will fund the $475 million up-front purchase price mostly with bank debt. Including the earn out, we estimate that the transaction will increase the company's pro forma adjusted leverage to about 2.4x from about 1.9x as of Dec. 31, 2018. We remain comfortable with the rating because the company previously deleveraged below 2x, supported by its strong free cash flow, after it acquired Water Pik in mid-2017. Furthermore, we expect the company to improve...

Bulletin