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The
debt-financed acquisition will add laundry detergents All and
Sun and fabric conditioner Snuggle to Henkel's portfolio and
make it the No. 2 laundry care maker in North America, behind
Procter & Gamble and ahead of Church & Dwight.
"We believe that the opportunity for Henkel to leverage its
innovation excellence on Sun brands is enormous, providing
significant upside (on top of synergies) to margins," Berenberg
analysts said.
Shares in Henkel were 0.6 percent lower at 1045 GMT, making them
the top performers on Germany's blue-chip DAX index, which was
down 7.1 percent in response to Britain's vote to leave the
European Union.
Adding Sun Products' business, with annual sales of about 1.4
billion euros ($1.6 billion) in the United States and Canada,
will raise the proportion of sales Henkel's laundry and home
care division generates in North America to about a third from
13 percent.
Assuming an operating margin of around 12 percent for Sun,
Berenberg said it expected the acquisition to add about 6
percent to Henkel's operating profit in 2017, which would rise
to 17 percent by 2019 thanks to revenue synergies.
Baader Bank analyst Christian Weiz said he estimated the deal
valued Sun Products at about 2.3 times sales, which he said
seemed very attractive, affirming his "buy" recommendation on
Henkel's stock.
Sun Products has around 2,000 employees at two production sites
and one research and development center in the United States.
Perella Weinberg Partners and Credit Suisse were financial
advisors to Henkel, while Cleary Gottlieb Steen & Hamilton LLP
acted as legal advisor. The acquisition will be fully
debt-financed and is underwritten by Deutsche Bank, JP Morgan
and BNP Paribas.
(Reporting by Maria Sheahan; Additional reporting by Arno
Schuetze; Editing by Paul Carrel and Georgina Prodhan)
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