Unilever Acquires Dr. Squatch Grooming Brand for $400 Million, Pushing for Global Expansion
In a move that underscores the growing demand for sustainable and natural personal care products, Unilever has recently acquired Dr. Squatch, a popular brand known for its handmade soaps, deodorants, haircare products, and colognes. The deal, reportedly valued between $1.5 billion and $3 billion, marks an expansion of Unilever's footprint in the men's grooming market.
Dr. Squatch, founded in 2013 by Jack Haldrup, has experienced remarkable growth since its early days. In 2019, the company was valued at just $4.3 million. However, with its viral marketing strategies, including partnerships with influencers and celebrities, the brand managed to establish a strong brand culture and attract investment from growth equity firm Summit Partners in 2021. Summit Partners invested, aiming to professionalize operations and support omnichannel growth, with a reported eye on a $2 billion exit for the brand.
The acquisition follows Unilever's strategy of divesting underperforming legacy brands as part of a broader portfolio repositioning under CEO Fernando Fernandez. Josh Friedman, CEO of Dr. Squatch, expressed excitement about the opportunity to amplify the brand's mission and reach with Unilever.
Dr. Squatch has scaled rapidly through direct-to-consumer and digital commerce channels, as well as retail distribution in North America and Europe. The brand's success in leveraging social media and creating a "built-in-culture" brand was a key factor in its rapid growth and eventual acquisition by Unilever.
The acquisition also reflects continued investor appetite for high-growth, digitally native consumer brands with strong DTC foundations. Unilever has recently made similar moves, acquiring sustainable deodorant brand Wild and other digitally-native brands.
With the acquisition, Dr. Squatch's annual sales are expected to exceed $400 million, adding significant value to Unilever's portfolio. The deal, if priced at the higher end of the reported range, would reflect a higher multiple of earnings before interest, taxes, depreciation, and amortization (EBITDA).
As Unilever continues to expand its presence in the men's grooming market, the acquisition of Dr. Squatch is a strategic move that aligns with the company's focus on sustainable and natural personal care products. The acquisition is expected to close in the second quarter of 2023, subject to customary closing conditions.
- The reported valuation of the deal, ranging from $1.5 billion to $3 billion, indicates a significant increase in Dr. Squatch's valuation since Summit Partners' investment in 2021, when it was valued at $4.3 million.
- With the acquisition of Dr. Squatch, Unilever's private equity portfolio will see a notable addition, expanding its business activities in the men's grooming sector, particularly in sustainable and natural personal care products.
- The strategic acquisition of Dr. Squatch is expected to enhance Unilever's finance metrics, with the brand's predicted annual sales exceeding $400 million adding substantial value to its portfolio.
- The acquisition of Dr. Squatch by Unilever is an example of the growing interest in high-growth, digitally native consumer brands with strong direct-to-consumer foundations, signaling a trend in the finance sector towards businesses with a strong online presence and a commitment to sustainability.
