SmithKline's big brands fetch pounds 260m

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The Independent Online
FAMOUS brands from Brylcreem to Badedas, Body Mist and Silvikrin are changing hands in a deal worth an estimated pounds 260m.

SmithKline Beecham, the giant UK-US drug company, said yesterday that it had finally reached agreement on a long-awaited deal to sell its remaining toiletries products.

Sara Lee, the American food and household products group, is paying pounds 211m for SB's bath and body care brands, plus production facilities in Germany, France, Italy and Denmark. The brands earned pounds 36m on sales of about pounds 164m in 1992, and had net assets of some pounds 55m.

German-based Wella group is purchasing SB's haircare products, principally the Silvikrin, Vosene and Bristows brands, for an undisclosed sum, thought to be about pounds 50m. Last year the haircare brands had sales of pounds 46m, with net assets of pounds 5m.

The sale is likely to generate a profit for SB. However, the company is simultaneously taking a pounds 100m restructuring charge connected with the sale against profits in the current year.

Analysts said yesterday that when goodwill and costs were taken into account as well, the net effect on earnings might well be neutral.

The consumer brands have been targeted for disposal since the 1989 merger of SmithKline Beckman of the US and UK-based Beecham. The company is seeking a tighter focus on healthcare products.

Harry Groome, SB's consumer brands chairman, said yesterday that the company's goal was to become a 'world leader in consumer healthcare'.

The sale, which virtually completes disposal of toiletries brands with the exception of some Latin American businesses and a Spanish joint venture, would enable the group to concentrate on its over-the-counter medicines, oral care products and health- related drinks, he said.

This might be through organic growth or strategic alliances and acquisitions, he added.

However, some analysts thought it likely that the drinks brands would also be sold. Drug companies are increasingly consolidating on their core territory of over-the-counter and medical supplies.

'By the end of the decade there will be six dominant players in this market,' said one. 'This is part of the cleaning up process ahead of the mergers and aquisitions which will take place to achieve that.'

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