MiBiz 2017 M+A Deals & Dealmakers Awards Winner: Deal less than $25 million
A phone call Ranir LLC CEO Rich Sorota got in early 2016 offered an opportunity: Multinational medical device and pharmaceutical company Johnson & Johnson Consumer Inc. wanted to sell its Rembrandt teeth-whitening product line.
The person on the other end of the call wanted to know if Ranir was interested. An “intrigued” Sorota agreed to meet.
At the follow-up meeting, execs at the Grand Rapids-based producer of store-brand and oral-care products liked what they heard, and Johnson & Johnson “liked what Ranir could do and how we could do it,” Sorota said.
“It was an important opportunity for us,” he said as he recalled the origins of the deal. “It was well worth learning more.
“As we got more information it was clear to me this was something we should try to go after.”
From the first phone call to gauge interest and their subsequent get-together, Johnson & Johnson and Ranir began working toward a deal that culminated in July 2016. The acquisition gave Ranir a well-established brand in a growing product category that furthered the company’s “simple purpose of delivering millions of affordable healthy smiles.”
“That’s kind of the key thing: We look at where we want to invest our resources and say, ‘Will this help deliver that purpose?’ We felt Rembrandt could,” said Sorota, Ranir’s CEO since July 2015. “Whitening is an important category for many consumers. They can’t afford to go get a $500 whitening treatment or a $70 whitening treatment. We felt that with Rembrandt and (with) our innovation, we would be able to give consumers an affordable option.”
With the deal for the Rembrandt brand, which Johnson & Johnson had acquired in 2005 from Proctor & Gamble Co., Ranir won a 2017 MiBiz M&A Deal of the Year Award in the category for transactions valued at less than $25 million.
Since closing the deal in July 2016 after what Sorota describes as a “very strong” due diligence process, Ranir has worked to revitalize the Rembrandt product line, which includes whitening toothpastes, strips, whitening systems and mouth rinses. The goal, he said, was “to make it even more desirable for more consumers.”
Rembrandt complements Ranir’s store-brand line of teeth-whitening strips and is aligned with the company’s stated purpose that drives strategy and decisions for growth, Sorota said.
“When there’s clarity of purpose with our associates and with our board, it becomes simpler to do,” he said. “We’re very growth-oriented so my charge and my team’s charge is to continue to grow our business. When opportunities present themselves that make sense for us and our purpose, I have tremendous support.”
The Rembrandt brand was Ranir’s first significant acquisition in years and the start of a trio of deals over a 12-month period. The company in October 2016 bought BrushPoint, a Toronto-based manufacturer of store-brand manual and power toothbrushes, and later picked up London-based Solent Group Holdings Ltd. in July.
The acquisition of the Rembrandt brand was “more straightforward” than other prior acquisitions the company has done, Sorota said. Johnson & Johnson has divested many brands over the years and “they had their act together.”
“I think both parties respected each other and that helped,” he said.
After doing the Rembrandt transaction and two other deals in a year, Ranir remains open to further M&A.
“If they’re smart and they’re aligned with our purpose and we’re confident we can create more value, we have the appetite,” Sorota said. “They do take effort, and it’s been a lot of work to acquire and integrate three deals in a short period of time, but you can’t control when an opportunity presents itself. If it’s consistent with our purpose and we’re confident that we can create additional value, then we’ll be very active in looking at that.”
Retailers that carry Ranir products and the Rembrandt brand embraced the deal. They “were glad they were dealing with someone they were already dealing with,” and excited about the potential for Ranir to grow the product category, he said.
Ranir has been experiencing double-digit top-line and bottom-line growth in an oral care market that San Francisco-based Grand View Research Inc. projects to grow from an estimated $27.02 billion last year to $40.92 billion globally by 2025.
The strong pace of growth generates challenges in orchestrating an acquisition. Properly managing growth and the dealmaking process requires that an acquisition “is resourced appropriately at the same time as you look at the rest of your business and you make sure you are able to do what you need to do to make both happen, both your current business and your new business,” Sorota said.
“When you’re growing as fast as we are, a lot of it is just about priorities,” he said. “When you have an organization that’s working hard to deliver what it’s currently doing, and you add an acquisition on top of it, that creates some meaningful work. You have to try to continue to be focused on being focused and say, ‘If we’re going to lean into this, what are some of the things maybe we can lean off of.’
“The greatest challenge is just continuing to prioritize and making sure you put the right amount of time and effort to ensure you know what you’re getting, and then when you get it, that you’re confident you’ll be able to create even more value.”
Key to executing the Rembrandt deal, or any acquisition, is fully understanding the product category of the target and how it fits into the Ranir business, Sorota said. Any buyer should make sure they have a “real clear strategy and the deal is consistent with that strategy.”
“If you know the space, so that you know what you’re getting into and the challenges and the opportunities, it just helps a great deal,” Sorota said. “When you really look and say, ‘OK, what’s our purpose and where are we going to deploy our assets, and let’s deploy those assets against our core, those things that we do exceptionally well,’ you’ll be successful.
“Sometimes when you get distracted or get out of your core, the risks can be far greater. It’s just a really simple rule of staying focused on our purpose.” n