The coronavirus is changing the lifestyle of many Americans profoundly. As more people work from home, learn online and engage in social distancing, they are buying products and services that cater to their emerging needs. As a result, dealmaking is surging in some sectors including products and equipment used in sanitizing.
In our November/December cover story, Mergers & Acquisitions identifies and explores five sectors receiving strong interest from strategic buyers and private equity firms: exercise equipment, cleaning products, food delivery, pets and mobile homes.
Here’s our look at the trends driving M&A among cleaning products.
Staying Safe, Keeping it Clean
Consumers want to be assured that as businesses gradually reopen, they are being properly sanitized. One company that makes disinfectant sprayers that are in high demand has attracted private equity interest.
The Carlyle Group (Nasdaq: CG) is acquiring a majority stake in Victory Innovations, a maker of electrostatic sprayers for disinfecting offices, airplanes and schools. The need for Victory’s sprayers has grown significantly as a result of the coronavirus pandemic, according to the two companies.
Demand is surging for hand sanitizers, masks, thermometer guns and plexiglass. Spraying machines are now common in airports, sports arenas and other entertainment venues.
“As more and more businesses grasp the need to not just clean surfaces, but disinfect them, we see tremendous growth opportunity for Victory,” says Vipul Amin, Carlyle managing director.
“Their highly effective technologies are more cost effective, use less disinfectant and operate faster than alternative disinfecting methods.” Carlyle’s investment will help Victory accelerate global growth, particularly in Asia, Europe, Latin America and Africa.
Victory’s sprayers can cover a large surface area with disinfectant quickly and wrap around objects. Schools and hospitals were among the first to use Victory’s products, followed by other businesses and industries, from airlines and hotels to gyms and professional sports teams.
“Victory’s electrostatic sprayers are quickly becoming the new standard in infection control, in particular as businesses plan to reopen following the coronavirus pandemic,” says Victory CEO Chris Gurreri.
It is not just businesses that need more cleaning products. Working from home has raised consumers’ awareness in personal hygiene.
“In household care and personal hygiene products, the pandemic has made consumers more aware of the need to maintain personal hygiene as well as a clean household, with an enhanced focus on ingredients that are safe, natural and green. Trust will become increasingly important to consumers, allowing innovative and appealing brands to capture market share and loyalty,” states a Meridian Capital report called: ‘Consumer Industry Spotlight, Household & Personal Care.’
Dealmakers are capitalizing on the need for sanitization products. Private equity firm Ardian has acquired a 50 percent stake in Angus Chemical Co. from Golden Gate Capital. The latter is keeping the other 50 percent. The enterprise value of the deal is $2.25 billion. Angus makes chemical additives that are used in products to help stop the spread of Covid-19, including hand sanitizers, diagnostic kits, antibody treatments and vaccines.
“Angus plays a critical role in the life sciences and personal care value chains, and its products have supported dozens of essential businesses over the last few months,” says Thibault Basquin, head of Americas investments at Ardian.
Golden Gate Capital bought Angus in 2015 from the former Dow Chemical Co., now Dow Inc. (NYSE: DOW), for more than $1 billion.
Ardian and Golden Gate Capital will partner with Angus CEO David Neuberger to grow the company by investing in core markets that are supplementing and developing new-to-world molecules, the two companies said.
“Demand for household cleaners and personal hygiene products have surged, generating triple-digit increases in sales of products such as hand sanitizer,” the Meridian report says. “Evidence that consumers have simultaneously relaxed their personal grooming routines and heightened their focus on household hygiene is everywhere.”
For more on Mergers & Acquisitions’ The New Consumer cover story, see:
The New Consumer: Comfort on the Move