M&A in Housewares and Household Products Continues, Although Deal Volume is Down in 2020
In early 2020, mergers and acquisitions in housewares and household products sectors started strong, with the number of acquisitions, growth capital and venture capital transactions up 33% in January and February, compared to the first two months of 2019. Unsurprisingly, as COVID shutdowns took place, M&A deal volume dropped in March, and by the end of June, the number of M&A transactions in the first two quarters was down 38% compared to 2019.
While the decline in deal volume is significant, the fact that the drop was not greater does reflect the overall strength of consumer products categories, compared to other sectors of the economy. Throughout COVID, demand for housewares products has stayed relatively strong; and mass, grocery and online channels all remained accessible during shutdowns.
As we speak with strategic and private equity buyers now, we anticipate that interest from buyers will continue to remain steady through the third and fourth quarters, assuming no additional negative developments related to the economy or the pandemic.
In particular, we are hearing from private equity buyers who are looking for add-on investments that will complement their existing investments (which will drive demand for acquisitions of smaller companies); and from both strategic and financial buyers who are looking for undervalued legacy brands. But as always, companies with strong brands and distribution, growing revenues, and healthy margins will continue to be attractive to buyers of all types.
Here are some key deals in housewares and household products from the first half of 2020:
Sustainable products and DTC cookware raise VC funds
- Loliware received almost $6M in venture capital financing, to drive ongoing growth and development of its seaweed technology designed to replace single-use plastics.
- Cloud Paper, a DTC brand that sells toilet paper made from bamboo, received up to $3M in venture capital financing from 15 partners.
- Sunstate Labs, manufacturer of concentrated Dazz Cleaning Tablets that can be dissolved in water, raised $1M in venture capital.
- Brooklyn-based DTC knife and cookware company Misen raised almost $1M in debt financing to support ongoing growth. Existing partners include private equity fund Vanterra.
- Also in cookware, Caraway Home raised $5.3M in venture capital from a variety of investors, including Bridge Investments, Springdale Ventures and Wesray Social Investments.
Multiple acquisitions in pet-care space
- Manna Pro Products is expanding its pet care portfolio with the recent acquisition of Promika LLC Pet Brands, a manufacturer of flea and tick solutions in Raleigh, N.C.
- In their fourth acquisition, Whitebridge Pet Brands has acquired Cardinal Pet Care, the parent company of brands including Pet Botanics, Crazy Dog, Full Life for Pets, Remedy+Recovery, Gold Medal Pets and Only Healthy Source, which offer a range of pet treats, grooming products and health aids. St. Louis-based Whitebridge Pet Brands is backed by Chicago-based private equity firm Frontenac.
- AutoPets, the founder of Litter-Robot, a self-cleaning cat litter box sold DTC, raised capital from Aldine Capital Partners, right on the heels of their December announcement they had raised $31M in capital from Pondera Holdings.
In laundry, VC for emerging companies, and acquisitions of legacy brands
- Hex Performance, laundry detergents designed for active and athletic wear, raised $5.17M from Lykcos Capital Partners. The brand received a smaller growth capital investment from NJ-based private equity firm Friend Skoler in 2017.
- Dropps, DTC distributor of eco-friendly laundry detergent pods, received 16M in growth capital from London-based investment firm The Craftory.
- Faultless Brands, parent company of Bon Ami, Niagra and home fragrance brand Trapp sold their garden tools company, Garden Weasel, to General Tools and Instruments in May. Then in a quick turnaround, Faultless was acquired in June by private equity firm Architect Equity.
- Scott’s Liquid Gold acquired the Dryel home-dry cleaning brand and Biz laundry additives from CR Brands for $10.45M.
- Ozark Brands followed up on their September 2019 acquisition of McCall’s Candles by acquiring Heartland Fragrance Company in June 2020.
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