DB Capital Partners Catches Comet –

DB Capital Partners, the private equity arm of Deutsche Bank, this month wrapped up the acquisition of Comet Brand, the well-known household cleaning product, from Procter & Gamble.

The purchase is an add-on for DB Capital portfolio company Prestige Brands International, which was formed in 1999 with co-investors Jefferson Capital Partners Ltd., Provender Capital Group LLC and Peak Capital Holdings, to acquire popular consumer products. To date, Prestige Brands sports recognizable names such as Prell shampoo and Chloraseptic throat sprays and lozenges.

The terms of the deal were undisclosed. However, Charlie Ayres, head of DB Capital Partners North America, said it was financed with senior debt led by Union Bank of California and equity that came primarily from Deutsche Bank’s balance sheet.

“The strategy is to build a group of high quality health and beauty aids and household products,” Ayres said. “The idea is to take advantage of well-known brands that are either under-managed or under-marketed, but that have senior level experience.”

With a little “elbow-grease” Prestige hopes to increase their operating performance, Ayres added.

Comet is the third and largest acquisition for Prestige Brands to date. The company’s revenue is running well over $100 million for this year and Prestige has plans to increase that to $300 million to $500 million over the next two years. Adding Comet to its list of products will allow Prestige Brands to compete in the $3 billion household cleaning products market. In accordance with the licensing agreement, Procter & Gamble will continue to market the Comet brand to Central and Eastern Europe and will market the away-from-home brand, Professional Line Comet, in North America.

Both of Prestige Brands’ previous acquisitions – Prell in November 1999 and Chloraseptic in March 2000 – also came from Procter & Gamble. However, Ayres said Prestige has looked elsewhere, such as with Dial and Unilever, but has not found the same value in other brands. “When we don’t get there on value, we’re very disciplined,” he said.

In seeking appropriate add-ons, Prestige evaluates the ability to change a brand’s marketing – by either increasing it or changing mediums, possible packaging changes, product extension – opportunities to build on the brand’s name or reputation, and distribution. Although these brands are not high-growth businesses, Prestige’s strategy has already seen double digit growth in both Prell and Chloraseptic, since their purchases. Both have increased the number of cases sold and expanded their customer bases. “It’s making money the old-fashioned way – with a lot of hard work,” Ayres said. “And it seems to be working if you find the right management team.”