What large conglomerates giveth, private equity firms taketh away. Recently, Procter & Gamble Co. and Dow Chemical Co. have been among those concentrating on the giveth part of that equation, rousing quite a stir for buyout firms interested in their divestitures.
Enter The Shansby Group. With P&G’s recent decision to divest itself of non-globally-selling businesses, San Francisco-based The Shansby Group jumped on its chance to break into household products – an area it has been trying to get into for some time. The firm last week agreed to purchase the Spic n Span and Cinch brands from P&G for an undisclosed amount.
“We’ve gone after several household products businesses through the years, and either they’ve gone to someone who was willing to pay far more than we would, or they ended up not being a good fit,” said Gary Shansby, general partner with The Shansby Group.
Household product companies hot commodities these days, especially with increasing movement in the chemicals industry. On Tuesday, federal antitrust regulators approved Dow’s long-delayed acquisition of Union Carbide Corp., requiring the company to sell chemical assets, which probably include its household products brands – and buyout firms will be there to pick up the pieces.
In fact, Shansby is so committed to building a portfolio of household products brands that his firm recently tripled its commitment to the area, designating $200 million of its current fund to household products alone.”Our plan here is to buy several brands and several companies and to take the size, profitability and scope of them up significantly,” Shansby said.
The group is betting on additional divestitures of conglomerates to build up its holdings in the household products area. It has even hired a new management team to lead the effort. Peter Mann, former president of Block Drug Co., will head what The Shansby Group is calling The Spic n Span Co. Shansby hired Mann when SmithKline Beecham bought Block – an action that eliminated Mann’s position at the company.
Not Just Chemicals
Household products is also a natural fit for private equity firms like The Shansby Group that focus on food, personal care products and over-the-counter pharmaceuticals, primarily because the products run along the same channels of distribution.
“Household products is a steady and stable business to be in,” Shansby said. “It’s a business that has slight growth, but good margins and is not prone to be impacted by economies.”
Although Shansby will be looking forward to further P&G or new Dow household products divestitures, the firm is not alone in its quest for these businesses. Other buyout firms have made their interests known and are expected to show Shansby some competition. These include Advent International, Harvest Partners and Palladium Equity Partners, which have all made household product sector plays in recent months.
Leslie Green can be contacted at