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Blairex Laboratories, Inc.

Background:
Based in Columbus, Indiana, Blairex Laboratories ("Blairex" or the "Company") is a manufacturer and marketer of a portfolio of Over-the-Counter ("OTC") consumer healthcare brands. The Company was founded in 1976 by Anthony Moravec as a contract manufacturer of OTC and specialty pharmaceutical products. Under the leadership of the Moravec family, including Tony's son and son-in-law, Blairex has been a pioneer in the development of OTC applications and delivery systems for non-medicated sterile saline solutions. The Company has successfully commercialized a number of products, marketed today under the Simply Saline® brand ("Simply Saline®" or the "Brand"), which leveraged its captive manufacturing expertise and trade relationships. In addition to Simply Saline®, the Company's portfolio of OTC products also includes several acquired brands such as Boudreaux's Butt Paste, Zilactin, and Sleepinal among others.
 
We engaged Sawaya Segalas at this critical juncture for our family for one simple reason: their track record. We were convinced that their understanding of the OTC market and their singular credibility with all the relevant buyers would help us maximize the value of the Simply Saline brand. We were right. The team's guidance during an accelerated due diligence effort and counsel at crucial turning points were key to realizing our objectives in the transaction.
Anthony Moravec
Chief Executive Officer, Blairex
 
 
Blairex's relationship with Sawaya Segalas goes back several years. During that time, a strategic dialogue developed as the Company evaluated several potential acquisition candidates that were being represented by Sawaya Segalas. Recognizing Sawaya Segalas' leadership in advising companies in the OTC sector, its extensive track-record of representing family-owned businesses, and its intimate familiarity with strategic and financial buyers in the space, the Moravecs called on Sawaya Segalas, without a formal 'beauty contest', to handle the divestiture of their largest brand, Simply Saline®, late in 2009.
 
Simply Saline Products
 
Simply Saline® is a highly attractive brand and represented a compelling investment opportunity. The Brand includes the following three product lines: (i) a sterile saline nasal mist designed to moisturize nasal passages, help clear congestion and allergens, and to relieve the symptoms of a cold ("Nasal Care"), (ii) a first-aid wound care product designed for cleansing bacteria and debris at the site of a wound ("Wound Care"), and (iii) a contact lens rinsing solution designed to prevent burning and stinging of eyes ("Eye Care"). Simply Saline® Nasal Care, which represents approximately 70% of the Brand's total sales, is the #1 retail brand in the high-growth nasal saline moisturizing category. In the last five years, the category has grown over 10% per year, the beneficiary of consumer's migration to natural and drug-free products.
 
Simply Saline Segment IRI Sales
 
Since its launch in 2001, the Brand has outpaced the growth of the category and successfully differentiated itself from other branded and private label offerings through innovative delivery systems, high value-added line extensions and effective consumer and professional marketing. These efforts have led to superior consumption growth for Simply Saline®. Over the past five years (through year-end 2009), retail dollar sales have grown at a CAGR of 22.4%, twice the rate of the moisturizing category and nearly three times the rate of private label.
 
Superior Growth Chart
 
Over this same time frame, the Brand's market share has increased from 13% in 2004 to 22% in 2009. The Company has been particularly successful with new, larger package sizes; tailored products for allergy and cold sufferers; and its line of children's and baby products.
 
Process Highlights:
 
  • Sawaya Segalas' marketing effort focused on strategic buyers and private equity-owned portfolio companies with established OTC sales and marketing capabilities
  • Reflecting the scarcity value of market-leading brands of scale, in growing categories, with attractive growth prospects going forward, interest in the brand was widespread. A cross-section of approximately 25 OTC companies signed confidentiality agreements and received a confidential offering memorandum. Of those, a fair number submitted non-binding indications of interest toward the end of March
 
Process Timetable and Milestones
 
  • Following a thorough review of the preliminary proposals and with the advice of Sawaya Segalas and input from Blairex management, a manageable number of parties were invited to attend management presentations two weeks hence, starting in the middle of April
  • Within two days of being invited to participate in the next stage of due diligence, one of the bidders, Church & Dwight ("Church"), approached Sawaya Segalas and expressed an interest in pre-empting the process at an attractive purchase price.
  • After consulting with Blairex and their legal advisors at Ice Miller, Sawaya Segalas received written confirmation of CHD's commitment to marshal the appropriate internal and external resources to complete their business diligence and deliver a full mark-up of the Asset Purchase Agreement within the two week window, ahead of the scheduled management presentations
  • With this commitment in hand, and a compelling purchase price, Sawaya Segalas, Ice Miller and Blairex evaluated the alternatives facing the Company. Among the most important considerations were:
    • Simply Saline®'s continued strong performance at retail as well as factory shipments, including a number of new distribution "wins" at new and existing retailers;
    • A strong process with a number of attractive preliminary indications from a set of well-qualified buyers with established M&A capabilities; however, many of these bidders would require third-party financing to complete the transaction; and,
    • Church's track record of completing transactions on an expedited timetable, their familiarity with the non-medicated saline business, and their historical relationship with Sawaya Segalas
  • After careful consideration, Blairex determined that the speed and certainty of a potential transaction with Church was superior to a process that would have likely entailed an extensive, multi-party due diligence effort including accounting firms, industry consultants and third-party financing sources.
 
Process Timetable and Milestones
 
Outcome:
  • Church's due diligence began almost immediately. A series of functional conference calls were held starting within three business days of the confirmation of their proposal. In response to specific follow-up requests, supporting schedules were compiled based on information already assembled for the data room,
  • With Sawaya Segalas' assistance, the Company's responsiveness enabled Church to complete the bulk of their business diligence within 10 business days, including a visit to Blairex's manufacturing facility in Columbus.
  • Definitive agreements, including transition services and a long-term supply agreement were negotiated concurrently with business diligence over the course of 12 business days. The agreements were signed on April 23rd, subject only to regulatory approval.
  • The transaction closed on June 4, 2010. Purchase price and terms were not disclosed.
  • The speed with which this transaction was completed was unprecedented for all parties.

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Simply Saline
Client
Blairex Laboratories, Inc.
Brand
Simply Saline®
Counterparty
Church & Dwight Co., Inc.
Segment
Personal Care, OTC & Cosmetics
Transaction
Corporate Divestiture
Transaction Value
Undisclosed
Closing Date
June 4, 2010
Role
Exclusive Financial Advisor
 
 
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