The move follows the announcement last month that CEO Michael Gallagher, 58, will retire by the end of this year. After becoming CEO in 1995, he spearheaded acquisition of all the brands up for sale.
A Playtex spokesman declined to comment, other than to refer to an April statement in which the company acknowledged it had decided to remain independent but will "continue to consider any strategic opportunities" that arise. The April announcement came 17 months after Playtex said it would explore sale of the company in whole or part.
Industry analysts said Playtex's $828 million in long-term debt, mostly accumulated during Mr. Gallagher's brand shopping spree, made the company too pricey for financial buyers when combined with its $460 million market cap and a takeover premium. And Playtex's hodge-podge of brands made it a tough fit for more-focused competitors.
The brands for sale accounted for only about $11 million of Playtex's $58 million in 2003 media spending, according to TNS Media Intelligence/CMR. Grey Global Group, which recently engaged investment bankers to help it explore a sale of its own, handles Playtex brands.
A sale would put Grey's hold on the brands at risk, particularly if they went to a strategic buyer, such as Kimberly-Clark Corp., Johnson & Johnson or Schering-Plough (marketer of Coppertone), which have established relationships with other agencies.
Banana Boat, with U.S. sales of $84 million last year, is the biggest of a bunch of divestiture candidates. Others include Dentek and Tek oral-care products and Tussy deodorant, whose combined sales total more than $150 million.
Faced with fierce competition in tampons from Procter & Gamble Co.'s resurgent Tampax and baby products from Johnson & Johnson and Novartis' Gerber, Playtex sales have declined each of the past two years-to $657.7 million last year from $723.5 million in 2001.
Playtex bounced back in the first quarter, with sales up 8% to $196 million, though earnings fell 26% to $8.4 million due to debt refinancing costs. But Playtex continued to lose share in its four key categories during the first 24 weeks of 2004, according to figures from VNU's ACNielsen, reported by Banc of America Securities.
Selling smaller pieces of the business would cut Playtex's debt as it fights better-heeled competitors. It would also leave behind a more focused portfolio of feminine- and infant-care brands that could appeal to big strategic buyers, including Kimberly-Clark Corp. and J&J, said one analyst.
Alberto-Culver Co. is among companies that has shown interest in Banana Boat, No. 2 in U.S. sun care to Schering-Plough's Coppertone, according to one executive familiar with the matter. Alberto-Culver declined to comment.
Lloyd Greif, principal in the Los Angeles investment banking firm Greif & Co., which specializes in handling sales of mid-market consumer product brands, said an improving economy and growing interest from private-equity funds in package-goods brands may make it a good time for Playtex to sell.