HENKEL BUYS RIGHT GUARD FROM P&G FOR $420 MILLION

Acquisition Could Be Good News for BBDO

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CINCINNATI (AdAge.com) -- Henkel has agreed to buy Right Guard and two other deodorant brands from Procter & Gamble Co. The move makes Henkel's Dial unit a major player in the U.S. category and could preserve the account for Omnicom Group’s BBDO Worldwide.

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Henkel in a statement said it paid $420 million for Right Guard, Soft & Dri and Dry Idea brands, which had global sales of $275 million last year. Right Guard, though it has declined in recent years as it has been passed by P&G’s Old Spice and Unilever’s Axe in men’s deodorants, remains the No. 3 brand in the segment.

Soap brands skew toward men
The deal makes Dial a much bigger player in men’s personal care, as its flagship deodorant soap and Coast products already skew toward men. It also makes Dial potentially a much bigger advertiser, as the acquired deodorant brands received more than $35 million in media support in 2004, according to TNS Media Intelligence, before Gillette began to pull back support last year given the likely divestiture of the brands. The Gillette deodorants traditionally have gotten more media support than the rest of Dial’s portfolio combined, including Dial, Coast, Renuzit and Purex.

P&G was required to sell the brands as part of its deal with the Federal Trade Commission to approve its $57 billion acquisition of Gillette in October.

The deal could result in BBDO keeping control of the account. The agency’s New York office handled the brands for Gillette. Its Chicago office is agency of record for Dial brands.

Changes in category
Henkel’s entry into deodorants comes amid some major marketing changes in the category. In the face of Unilever’s steady ascent in recent years behind Axe and Degree, P&G earlier this month dropped its longtime Old Spice agency, Publicis Groupe's Saatchi & Saatchi, New York, in favor of Wieden & Kennedy, Portland, Ore.

Dial’s purchase also leaves other smaller players in deodorant facing some big choices. Industry analysts and others familiar with the matter said Church & Dwight Co. and Japan’s Kao Brands were also interested in the Gillette brands.

Church & Dwight
One person familiar with the matter said acquiring the brands was a make-or-break factor for the Church & Dwight deodorant business, which has been declining amid major marketing inroads by Unilever and P&G. Having failed to buy the Gillette brands, Church & Dwight may sell or license its own, which include Arrid and Arm & Hammer, the executive said.

A Church & Dwight spokeswoman could not immediately be reached for comment.

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