PZ Cussons buys Childs Farm, will target UK and international growth
Personal care products giant PZ Cussons has acquired the entire issued share capital of Childs Farm. Joanna Jensen, founder of Childs Farm, has also made an investment in the PZ Cussons subsidiary through which the acquisition was made, which means the company now actually has around a 92% holding in Childs Farm that cost it £36.8 million. It also has an “agreed path to full ownership by the end of May 2025”.
So what exactly does its new buy do? Childs Farm is “the market-leading brand in UK baby and child personal care”, with product lines that include bath and shower, skincare and haircare, “and are all anchored in a natural proposition and suitable for sensitive skin”.
Cussons said the “brand is highly complementary to our strategic focus behind the core categories of Baby and Hygiene. As we welcome Childs Farm to the PZ Cussons family as a ‘Must Win Brand’, we will leverage our brand-building capabilities to improve its UK leadership position, while also seeking to capture its significant international potential”.
The brand has grown fast since it started trading in 2011, and has a number of features that will appeal to a large corporation — such as “highly attractive gross margins”, and its "very strong sustainability credentials, through its cruelty-free and vegan products”. In fact, it’s “well-progressed towards B Corp certification”.
That said, in the last year for which the brand has its account available, it was loss-making. For the year ended 31 December 2020, the loss before tax and the gross assets attributable to Childs Farm were £0.9 million and £7.5 million, respectively. Reported gross revenue was £17.4 million.
That loss could be seen as a consequence of the pandemic, but the company was also loss-making in the previous year. However, the 2019 loss reversed profits made the year before that and was largely a consequence of the business investing heavily for future growth. And Cussons clearly sees the potential in it given the money it has invested in buying the brand.
Matthew Wiseman, Partner and Head of Consumer in the UK at the deal’s adviser Alantra, said: “I have huge admiration for Joanna’s achievement in setting up Childs Farm and growing the business to become the UK’s leading children’s toiletries brand. I got to know Joanna after using Childs Farm products to successfully treat my son’s chronic eczema so can testify to their quality. Since then, we’ve met regularly to talk about strategy, when would be the right time to partner with another business, and preparing for a transaction.
"Partnering with PZ Cussons is the natural evolution for the business and a tremendous achievement for Joanna and her team. Jonathan Myers and PZ Cussons have huge respect for the Childs Farm brand and share the same values and ethos. Together, they can build on the incredible love the brand engenders with consumers and continue to grow in the UK and beyond.”
He added: “Businesses like Childs Farm, that are born from their founders’ determination to solve personal problems, have a high level of affinity and trust with their customers. Financial investors are keen to use their skills to strengthen such businesses and expand their markets while personal care operators, which struggle to replicate the product innovation and associated brand loyalty, see an opportunity to accelerate global growth.”
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