HG bonds: Church & Dwight backs M&A play with new 2031 notes; terms

Church & Dwight Co. Inc. today completed a $400 million offering of 2.30% 10-year notes due Dec. 15, 2031, at T+87.5.

On Nov. 24, the company agreed to acquire TheraBreath, a premium oral health brand, for $580 million. The transaction is expected to close this month. Proceeds from today's bond placement will be used to fund a portion of the acquisition price, according to regulatory filings. If the acquisition is not consummated on or prior to April 23, 2022, the notes are redeemable at 101% of par under a special mandatory redemption provision, filings show.

Earlier today, S&P Global Ratings and Moody's assigned respective BBB+/A3 ratings to the new bonds. The outlook is stable on both sides.

Ratings said the TheraBreath purchase will complement Church & Dwight's oral care portfolio. "We believe the acquisition is consistent with the company's ongoing tuck-in strategy and the pro forma leverage is within the bounds of the current ratings at leverage in the low-2x area or below. We expect the company to prioritize debt reduction over excess share repurchases to reduce leverage following the acquisition," the agency said today.

Moody's noted that the TheraBreath acquisition will increase debt/EBITDA leverage from about 1.9x as of June to an estimated 2.5x at the end of 2021, just after closing. "Product diversity is good and geographic diversity is improving though still weaker than higher-rated peers,” Moody's noted today.

The Ewing, N.J.-based company develops, manufactures and markets household and personal care and specialty products.

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