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December 20 , 2011
Prestige Brands Holdings, Inc. Signs Definitive Agreements With GSK to Acquire 17 Consumer OTC Healthcare Brands in North America. Transactions Will Be The Largest in the Company's History.
BUSINESS WIRE
 

IRVINGTON, N.Y. — Prestige Brands Holdings, Inc. (NYSE-PBH) today announced the signing of a definitive agreements with GSK to acquire 17 over-the-counter (OTC) pharmaceutical brands sold in North America for a total of $660 million in cash. The transactions are expected to be completed in the first half of calendar year 2012 subject to customary legal and regulatory closing conditions, including clearance under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as applicable, and the Company closing on its committed financing for the acquisitions.
 
According to Matthew M. Mannelly, CEO, "The signing of these agreements with GSK is a transformational event for Prestige Brands. It fulfills our commitment to createshareholder value by acquiring well-known OTC brands with strong consumer franchises and applying our marketing and sales expertise to them. These transactions, upon completion, will be the largest acquisitions of assets in the Company's history, following on the heels of our recent acquisitions of five brands from Blacksmith Brands and Dramamine(R) from Johnson and Johnson over the past year. We expect that upon completion, the transactions will give our Company a strengthened portfolio with total OTC revenues of approximately $500 million, as well as platforms to compete in two new categories: adult aspirin-based analgesics and gastrointestinal (GI). We believe the acquisitions are consistent with our strategic direction, fit with our fixed asset-light outsourced model, provide opportunities for certain cost savings, are financially attractive to shareholders, and will result in annual corporate revenues of approximately $600 million with an OTC business segment representing 85% of revenues and 90% of profits," he said.
 
Among the brands the Company agreed to acquire are the BC®, Goody's®, and Ecotrin® brands of pain relievers; Beano®, Gaviscon®, Phazyme®, Tagamet® and Fiber Choice® GI brands; and the Sominex® sleep aid brand. "The cash purchase price of a total of $660 million in cash, inclusive of inventories, will be structured as asset purchases that result in substantial tax benefits, creating an effective purchase price of a total of $535 million," said Ron Lombardi, CFO. "We plan to fund these transactions through the issuance of debt comprised of a new credit facility and bonds," he said. "We anticipate that the addition of these brands will be accretive in the Company's fiscal 2013, which begins on April 1, 2012. We also anticipate improvements in our overall gross margin and EBITDA profiles, and importantly, a substantial increase in our free cash flow as a result of these transactions."
 
Sawaya Segalas & Co., Inc. LLC is acting as exclusive financial advisor to Prestige in these transactions.
 
Conference Call and Presentation
The Company will host a conference call today at 10am ET to review the agreements. The call may be accessed by dialing 877-556-5921 about 10 minutes before the start of the call. International callers may dial 617-597-5474. The conference password is "prestige". A replay of the call will be available for two weeks, and can be accessed by dialing 1-888-286-8010, or 1-617-801-6888 for international. The replay password is 45043821. A slide presentation will accompany the call and can be accessed from the Investor Relations section of the Company's website, www.prestigebrands.com.
 

 
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