Merck to Acquire GlycoFi & Abmaxis

Merck & Co. agreed to acquire GlycoFi Inc., a closely held Lebanon, N.H., biotechnology firm, for about $400 million.

The purchase announcements came two weeks after the company's chief executive, Richard T. Clark, promised shareholders big changes to Merck, which has been wounded in litigation over heart problems caused by its pain medication Vioxx.

The Whitehouse Station, N.J., company said GlycoFi is involved in yeast glycoengineering and optimization of biologic drug molecules, and the companies have partnered since late 2005. Merck expects the deal to close in the second quarter.

GlycoFi was founded in 2000 and has about 55 employees. Its investors include Polaris Venture Partners, SV Life Sciences, Boston Millennia Partners, and Fletcher Spaght Ventures.

Separately, Merck agreed to pay $80 million for closely held Abmaxis Inc., a Santa Clara, Calif., developer of monoclonal antibody products for therapeutics and diagnostics. Abmaxis was founded in 2000. Merck established a collaboration agreement with Abmaxis in late 2004.

Shares of Merck fell 2 cents, to $34.43.

Unilever Sells Finesse and Aqua Net

U.K.'s Lornamead Continues to Pick Up Orphaned Brands

Unilever has sold its Finesse and Aqua Net hair-care brands in the U.S. and Canada to U.K. personal and home-care marketer Lornamead Brands for an undisclosed figure.

 

Finesse and Aqua Net generated $85 million in combined revenue in 2005.

The brands generated $85 million in combined revenue for 2005. Unilever retains control of Aqua Net in Latin America, where it's a leading styling brand in Mexico. The deal doesn't include Salon Selectives, another hair-care brand that has lost most of its distribution and was among brands Unilever sought to sell, according to people familiar with the matter.

Reshaping hair-care portfolio
"This agreement takes us a step further in reshaping our hair-care portfolio of brands in North America," John Rice, president of Unilever Americas, said in a statement. "It will enable us to focus on bringing innovation to market through our strong local and global brands."

Finesse and Aqua Net had been low priorities for Unilever in hair care since the 2003 launch of Dove in the category. The company is preparing to launch another new brand, Sunsilk, into the U.S. this summer. Finesse and Aqua Net did not have ad agency assignments.

The deal is the second orphan-brand acquisition this year for privately held Lornamead, which earlier this year acquired Yardley from Procter & Gamble Co. Though Yardley has some U.S. distribution, the deal gives Lornamead, launched in 1978 originally to represent marketers in Africa, a bigger foothold in North America.

Mars to acquire Doane Pet Care

 

Brentwood, TN-based Doane Pet Care Co., which was purchased by a teachers’ pension fund five months ago, is being sold again – this time to candy giant Mars Inc. Mars, based in McLean, Va., announced Wednesday it has entered an agreement with Teachers’ Private Capital, the private equity arm of Ontario Teachers’ Pension Plan, to buy Doane’s North America operations to strengthen Mars’ pet food
business.

Terms of the deal were not disclosed. A third unnamed company is buying Doane’s European business. Doane will continue to maintain the Mars North American Pet Business in Brentwood under the leadership of current Doane President Doug Cahill. Cahill declined to comment until the deal closes in the next couple of months. Mars executives said the acquisition of Doane’s 20 U.S. plants and two distribution centers gives Mars a more efficient, geographically distributed network in which to expand its pet-care business.

Aside from making M&Ms, Snickers and Uncle Ben’s products, Mars also owns the Pedigree and Whiskas pet food brands. In the pet food business, Mars falls second in market share to Nestle Purina, according to industry analysts.

Doane bills itself as the world’s largest private label pet food supplier. One of its biggest customers is Wal-Mart, which sells Doane products under the Ol’Roy label.

Mars’ purchase of Doane is big news in the pet food industry because it goes a long way toward leveling the playing field between Mars and Nestle Purina, said David Lummis, a pet market analyst for Packaged Facts in New York. Lummis said the purchase shows that Mars is serious about going after the growing discount markets where off-brand names are sold.

“[Mars] has really cornered a big chunk of the value end of the business now,” he said.

Last August, when Doane had announced it would be sold in November to the teachers’ fund for $840 million, Cahill said Doane would be getting needed capital to restructure its more than $500 million in debt and to grow globally.

The pension fund considers itself a long-term investor, so the quick sale of Doane is unusual, said Deborah Allan, communications director for the Ontario Teachers’ Pension Plan.

“When we had an opportunity to recognize the value with putting two market leaders together, we knew it was the right thing to do,” she said.

Coca-Cola Enterprises names John Brock CEO

Coca-Cola Enterprises named John Brock, a former Cadbury Schweppes executive, as its new chief executive officer on Tuesday afternoon.

Atlanta-based CCE, the largest bottler of Coke products in the world, has officially been searching for a new leader since John Alm resigned in December.

Brock, 57, spent nearly 20 years at Cadbury, rising all the way to chief operating officer. He left Cadbury, the maker of Dr Pepper, in early 2003 after Todd Stitzer was named CEO.

Brock became CEO of Interbrew, a Belgium brewer. Under Brock's leadership, Interbrew merged with Brazilian beer behemoth, AmBev. Though Brock initially emerged as the leader of the newly named InBev, he left when his contract was not renewed. An AmBev executive ended up with the top job at InBev.

"Coca-Cola Enterprises is at an exciting point in its 20-year history, and I look forward to building on the company's rich legacy and strong foundation," Brock said in a statement.

Brock is, however, inheriting challenges as well.

Though CCE is quite profitable – it earned $514 million last year – it has struggled to grow its sales volume in recent years, particularly in Europe. The stock price is sluggish. And more than 50 smaller bottlers in North American filed lawsuits against CCE and Coke earlier this year over a new distribution method that CCE is using to distribute PowerAde to Wal-Mart.

In 2005, the company's European volume declined 2 percent. Volume, a key measure in the beverage industry, is the number of cases sold. The company blames increased concerns about obesity in European markets like France and the United Kingdom, as well as general economic malaise and the increasing popularity of discount retailers. The company has said it expects to return to growth in 2006 in Europe, projecting a 1 percent to 2 percent volume increase for the year.

In North America, CCE grew its sales volume last year, although modestly. Volume was up 1 percent for the year. The company has said it will grow volume 1 percent to 2 percent in 2006.

CCE Chairman Lowry Kline, who has been serving as interim CEO, said in a statement: "John's global operations, marketing and brand experience make him uniquely suited to address today's complex marketplace dynamics."

For Brock, the new job offers a bit of a homecoming. He grew up in Mississippi and received both a bachelor's and a master's degree from Georgia Tech.

UK's Cadbury to buy out Dr Pepper

Cadbury Schweppes is close to acquiring the Dr Pepper/Seven Up Bottling Group, the largest independent bottler in the US, from the Carlyle Group, a US private equity group.

The acquisition, expected to be announced shortly, will give Cadbury greater control over the distribution of its US soft drink brands, which include Dr Pepper and Snapple.

Cadbury has a 45 per cent equity stake in the bottling group, with most of the remainder held by Carlyle.

Cadbury and Carlyle bought the privately held group for $283m in cash and $408m in debt in 1999.

Analysts said that Cadbury – the third-biggest soft drinks manufacturer in the US behind Coca-Cola and Pepsi with a 17 per cent share of the fizzy drinks market – could pay close to £300m ($535m) for Carlyle's equity stake.

Cadbury declined to comment.

The purchase will add to growing signs of restructuring in the US beverage industry, as soft drink companies rethink their relationship with the bottlers that produce and distribute their products.

Beverage companies are seeking greater consolidation among bottlers in response to mounting pressure from powerful retail chains such as Wal-Mart for suppliers to become more efficient.

By gaining greater control of its distribution network, Cadbury could negotiate with retailers directly.

About 24 per cent of its fizzy drinks are distributed by the Dr Pepper bottling group, with much of the rest distributed through bottlers part-owned by Coke or Pepsi.

Some analysts say that combining its manufacturing and distribution operations may also make it easier for Cadbury to eventually spin off its US beverages armand use the cash to make acquisitions in confectionery.

Although the US beverages operations have been recording healthy growth over the past two years, and generate cash for Cadbury, the company has identified confectionery as its main growth business globally.

Cadbury's claims to be the world's biggest confectionery company, with a market share of about 10 per cent, putting it ahead of Mars, Nestlé and Hershey.

Cadbury has been diversifying away from chocolate confectionery in recent years and has been moving more heavily into sugar confectionery such as chewing gum.

Cadbury is keen to challenge Wrigley's dominance of the global gum market.

Kerry Clark leaves P&G to become CEO Cardinal Health

Kerry Clark, one of the top half-dozen executives at Procter & Gamble Co. and viewed as one of the top candidates to eventually replace chief executive A.G. Lafley, has left P&G to become president and CEO of Cardinal Health Inc. in Dublin, Ohio.

Clark, a 32-year P&G veteran, was vice chair for family health at P&G, overseeing the powerhouse toothpaste and diaper businesses, as well as pharmaceuticals, pet food and other health-care units. Combined, they posted sales of more than $19 billion during P&G’s last fiscal year.

Procter and Cardinal announced the change in news releases this morning, effective immediately. Clark, 53, succeeds company founder Robert Walter as CEO. Walter will continue as chairman.

Two other P&G vice chairs will split Clark’s duties. Bruce Byrnes, who headed the household businesses, will add baby care, family care and pet food. Susan Arnold, global beauty-care chief, will add the health-care categories.

Before his current assignment, Clark had headed P&G’s global market operations, which includes functions such as sales inside specific geographies.

“Over his P&G career, Kerry helped lead virtually every P&G business category and was the architect of P&G’s developing markets growth strategy,” Lafley said in the news release.

A Canadian, Clark joined P&G in 1974 as a brand assistant. In the late 1990s, he spent several years as head of P&G’s operations in Asia.

Constellation Brands buys Vincor

The wine business looked a little bit less fragmented Monday as Constellation Brands Inc., the world's biggest winemaker, finally struck a deal to acquire Canada's Vincor International Inc. for nearly $1.1 billion.

Even with its newest trophy, Constellation will control less than 5 percent of the global wine market.

"There's very little concentration in the wine world right now, and so it's quite conceivable that there will be more acquisitions by Constellation after this one," said Tim Ramey, an analyst for D.A. Davidson & Co. in Lake Oswego, Ore.

"Wine will always be way more fragmented than, say, carbonated soft drinks. You want your Coca-Cola to taste the same whether you're here, in Mexico City or in Canada. But you really don't like sameness in wine. Wine is all about terroir and place and vintage and varietal and ... that seems to encourage diversity."

Constellation, the only beer, wine and spirits company based in the United States, had dropped months of hostile bidding for Vincor in December after shareholders of Canada's No. 1 winemaker passed on a $1 billion cash bid.

Under an agreement disclosed Monday, Constellation will pay 36.50 Canadian dollars ($31.07) per share, or about $1.09 billion, in cash for Vincor's 34.8 million shares outstanding. In addition, Constellation will assume about 250 million Canadian dollars ($220 million) in debt.

Constellation's A shares rose 20 cents, to close at $25.25 on Monday on the New York Stock Exchange.

The deal, expected to close in June, was approved by both companies' boards but still must be approved by shareholders.

"What makes a deal work, and a deal happen, is when they're meant to be and they're good for both shareholders. And this was just clearly meant to be," Constellation's chief executive, Richard Sands, told analysts in a conference call.

Constellation said the price represents a 15.9 percent premium to Vincor's closing price Friday and a 55.5 percent premium to Vincor's price on Sept. 27, before Constellation made its initial offer. The deal will boost its earnings per share by an estimated 2 cents to 3 cents in fiscal 2007, Sands said.

Analysts surveyed by Thomson Financial expect Constellation to earn $1.77 per share in 2007. The company releases its fourth-quarter earnings for 2006 on Thursday.

"We are pleased that Constellation has offered a value that fully recognizes our strong brands, exceptional work force and significant international growth opportunities," said Vincor's chief executive, Donald Triggs.

Based in Mississauga, Ont., near Toronto, Vincor is North America's fourth-largest wine producer with $565 million in fiscal 2005 revenue and 2,000 employees in Canada, California, Washington state, New Zealand, Australia and South Africa. Its brands include Inniskillin, Jackson-Triggs, Toasted Head and Kumala.

Vincor's operations will be managed as a separate entity -- a model Constellation has stuck with during an 18-year-long acquisition spree.

The takeover expands Constellation's presence in the fastest-growing wine sector -- the premium end where prices run from $12 to $40 -- "so it tilts the whole portfolio to a faster-growth direction," Ramey said.

"The magic of the Constellation acquisition model," he said, is "they let the winemakers continue to do exactly what they have always done, so they don't change the perception of the product in the marketplace. But they recognize they can buy a cork cheaper, a glass cheaper, packaging and shipping cheaper, so they bring cost synergies to those businesses as well as the distribution centers."

Founded in 1945 in upstate New York's grape-growing Finger Lakes region, Constellation quietly became the world's No. 1 winemaker in 2003. It leaped further ahead of longtime American wine leader E.& J. Gallo Winery when it bought Robert Mondavi Corp. for $1.3 billion; its sales reached $4 billion last year.

Based in the Rochester suburb of Fairport, Constellation boasts more than 200 brands ranging from jug wines to coveted California reds, beer imports such as Corona and St. Pauli Girl, and liquors such as Fleischmann's vodka, Skol gin and Black Velvet Canadian whiskey.

Glaxo, Colgate, and Novartis seen bidding on Pfizer products

NEW YORK - British drugmaker GlaxoSmithKline Plc and Colgate-Palmolive Co. are among companies expected to submit offers for Pfizer Inc’s array of consumer products in first-round bidding on Wednesday, the Wall Street Journal said.

New York-based Pfizer, the world’s largest drugmaker, is hoping to fetch about $14 billion for the products, the report said, citing people familiar with the situation.

The products include Bengay pain-relieving cream, Sudafed cold tablets and Listerine mouthwash.

Pfizer, which has steadily sold off parts of its operations to focus on its core drug business, acquired many of the consumer brands in its 2000 merger with rival U.S. drugmaker Warner-Lambert Co.

Pfizer said in February it aimed to sell or spin off its consumer products division, which had sales of $3.88 billion last year.

There was widespread speculation soon after the announcement that bidders could include Glaxo, which has a line of consumer products, and U.S.-based Colgate, which could market Listerine alongside its best-selling line of toothpastes.

Colgate Chief Operating Officer Ian Cook told an investors’ conference earlier this month that Listerine was strategically right and that Colgate would look at buying the brand “very, very aggressively.”

Glaxo Chief Executive Jean-Pierre Garnier said on Feb. 8 he would look at the Pfizer consumer healthcare business but there was no guarantee of a bid. A Glaxo spokesman declined to comment any further on Wednesday.

Colgate had no immediate comment on the newspaper report.

Industry analysts said other potential bidders could include Swiss drugmaker Novartis AG and Britain’s Reckitt Benckiser Plc , which was reported earlier this month to be lining up financing for a bid.

Colgate to buy toothpaste maker for $100 million

PORTLAND, Maine - Colgate-Palmolive Co. announced Tuesday it's buying Tom's of Maine, the leading maker of natural toothpaste, which used to tweak big toothpaste makers for putting artificial additives like saccharin in their products.

The $100 million cash deal for privately owned Tom's of Maine, which got its start in 1970 by producing a phosphate-free laundry detergent, reflects Colgate's strategy of focusing on the higher-margin oral and personal care businesses.

But founder Tom Chappell said that neither the company's business philosophy nor its quirky toothpaste flavors like fennel, apricot and orange-mango will change.

Colgate, a major rival of Procter & Gamble, said the purchase of 84 percent of the Kennebunk-based business is expected to close in the second quarter. The Chappell family that founded the company will keep a 16 percent stake. Colgate will have additional share purchase opportunities over the coming years.

Chappell said Tom's of Maine, with annual sales of about $50 million, will maintain its product formulas and be managed as a stand-alone subsidiary, much as Colgate's Science Diet pet food line has been. But he said Colgate's financial clout and distribution network will enable his brands to make inroads into national chain stores and grow to their full potential.

The U.S. market for so-called natural oral and personal care products is valued at $3 billion and is growing at 15 percent per year, Colgate said.

"The irony is that although we are growing in the high teens and low 20s, it's not enough to meet a demand 10 times the size," Chappell said in an interview. "About 25 percent of Americans are interested in these kinds of products."

Tom's of Maine products are distributed in Canada and the United Kingdom, but Chappell said the greatest growth opportunities are in the U.S. market.

He said his toothpaste is "now the number six brand in America, and I think we will be number three with the help of Colgate."

The company's operations will stay in Maine, all departments will remain intact and no jobs are being eliminated, Chappell said. "Colgate said we do not want to see synergies at the cost of people," he said.

Packaging of Tom's of Maine products will not identify the company as a Colgate subsidiary, he said.

His company has long espoused a philosophy of social responsibility and environmental awareness, and longtime customers responded to news of the Colgate acquisition with mixed feelings.

"My first thought was that's consorting with the devil," said Linda Shary of Portland, whose family brushes with Tom's of Maine toothpaste and has used some of its other products in the past.

"But on second thought, it would be great if they could partner and start getting more socially responsible products into the Colgate line."

Another Tom's of Maine customer, Marie Malin of Falmouth, had similar thoughts.

"It's always a little bit sad when these Maine-based companies are bought out by national companies," Malin said. "But it could be a good thing because the more that American consumers know about and purchase natural and organic products, the better the world will become."

L'Oreal will pay 300.0 pence a share for Body Shop, which will be maintained as a separate entity and continue to be led by its current management team, the French firm said in a statement.

The offer price is 31.5 percent higher than Body Shop's average share price over the six months before February 21, the last day before speculation of a bid emerged, the companies said in a statement.

Body Shop directors holding about 21.6 percent of share capital -- including company founders Anita and Gordon Roddick with 18 percent -- have accepted the offer.

On the Paris stock exchange in early trading, the price of shares in L'Oreal rose 0.7 percent to 75.15 euros after the news of the purchase.

"The acquisition reinforces the portfolio of Oreal brands with a brand that is very complimentary and with a strong identity and strong values. L'Oreal undertakes to respect these values," L'Oreal said

The Body Shop was founded in 1976 by Anita Roddick, who rapidly expanded the business from modest beginnings with a determination to offer products which had not been tested on animals and used natural products. Body Shop was a leader in the so-called ethical business sector and developed a high-profile brand.

But as other retailers leaped aboard the natural beauty bandwagon, Body Shop struggled, with Roddick stepping down as chief executive in 1998.

It has about 1,900 shops in 50 countries, with its main markets being Britain and the United States. It posted sales of 419.0 million sterling (603.0 million euros, 735.0 million dollars) in the 52 weeks to February 26.

L'Oreal, which owns the brands Lancome, Garnier and Maybelline lipsticks, reported in February a sharp rise in underlying net profit in 2005 owing to expansion in emerging markets and North America.

The group said the results marked 21 years of annual profit increases of 10 percent or more, saying net profit had risen by 37 percent on a comparable basis to 1.97 billion euros and signaled that it was looking for acquisitions.

L'Oreal was among leading luxury goods and perfume companies fined a total of 46.2 million euros this week by the French competition authority for price-fixing.

L'Oreal rejected all accusations of price-fixing with the distributors of its perfumes and said it was considering launching an appeal.