Household goods producer Helen of Troy Ltd. on Dec. 19 agreed to acquire hair-blowout salon operator Drybar Holdings LLC for a total consideration of about $255 million in cash.
The Bermuda-based company will acquire Drybar's trademark and intellectual property assets associated with its haircare products, as well as production assets and working capital. Helen of Troy will also grant a worldwide license to the hair salon company to continue its operations under the Drybar brand.
Drybar products are sold across various premium beauty retailers such as LVMH Moët Hennessy - Louis Vuitton Société Européenne-owned Sephora, Macy's Inc. and Nordstrom Inc.
"Drybar products are winning in the prestige category with premium appliances, liquids, and accessories that resonate with a wealthier, on-trend consumer demographic for use at home and by stylists. The business has more than doubled in size since 2016 and continues to grow at a healthy double-digit rate across a wide array of retailers," said Helen of Troy CEO Julien Mininberg.
Mininberg said that Drybar will complement the Revlon and HOT Tools products.
Helen of Troy aims to expand its beauty products business through the deal. Drybar, in turn, plans to expand the footprint of its blowout-only hair salons.
"The salons, which feature professional stylists who demonstrate and recommend Drybar products thousands of times a day to a growing clientele, will exclusively use, promote, and sell our Drybar products globally," Mininberg said.
Drybar products team, including its leader, John Heffner, will join Helen of Troy, upon closing.
The transaction is expected to be immediately accretive to Helen of Troy's consolidated sales growth rate, gross profit margin, adjusted EBITDA margin, adjusted diluted EPS and cash flow from operations. The company's beauty segment will see added benefits of the deal on comparable operating measures, it said.
Additionally, the company expects its fiscal 2020 pro forma debt/adjusted EBITDA ratio to be slightly above the pre-acquisition debt/adjusted EBITDA ratio at the end of the second quarter ended Aug. 31.
Helen of Troy said the deal value implies a pre-synergy multiple of less than 13x estimated adjusted EBITDA for 2019. Net sales revenue for 2019 is expected to be $64 million to $66 million.
The deal is expected to be completed by Jan. 31, 2020, subject to customary closing conditions and regulatory approvals.