Spokespeople for Playtex, as well as potential acquirers Johnson & Johnson, Kimberly-Clark Corp., Dial Corp., Procter & Gamble Co. and the Blackstone Group private equity fund declined to comment.
Deal done by May
Playtex said in November it is
Johnson & Johnson may be the candidate best suited to buy Playtex as a whole, since Playtex's core tampons and baby products businesses would fit into J&J's portfolio, said one analyst. But it would be difficult for any one buyer to make a fit of Playtex's full range of products, which also include Banana Boat suntan lotion and Woolite carpet cleaner. But while J&J's package goods brands have been healthy and growing, the company has focused acquisition activity in recent years on its health-care business.
While Kimberly-Clark would fit equally well with Playtex, the company's recent change in leadership and efforts to bounce back from flat sales and earnings growth would make the timing bad, the analyst said.
Antitrust issues for P&G
P&G could face steep antitrust hurdles in acquiring Playtex's tampon business. P&G Chairman-CEO A.G. Lafley has said repeatedly that P&G's focus for potential acquisitions would be in beauty and health care, plus smaller "tactical" deals in home care.
Dial Corp. Chairman-CEO Herb Baum in years past has mentioned Playtex as a hypothetical merger partner for Dial and has said more recently Dial is considering using its growing cash reserves to make small acquisitions that complement its existing personal- and laundry-care businesses. Buying Playtex would exhaust all of Dial's cash and require taking on debt Mr. Baum has worked hard to pay down over the past two years.
Playtex's debt: $850 million
Any acquirer of Playtex as a whole would need to take on its $850 million in debt in addition to paying a premium to its roughly $475 million market capitalization. That would amount to more than nine times Playtex's 2002 cash flow, a multiple considered rich by industry standards.