Tom's of Maine toothpaste has joined Ajax cleanser, Irish Spring soap and Speed Stick deodorant under the Colgate-Palmolive Co. umbrella. But industry observers expect the brand to retain its image, values and quirky flavors.
New York-based Colgate announced March 21 it will pay about $100 million to acquire 84 percent of Tom's of Maine. Tom and Kate Chappell, who founded Tom's of Maine in Kennebunk, Maine, in 1970, will own the remaining 16 percent and will remain chief executive and vice president of the company.
Tom's of Maine manufactures about 90 different natural personal care products, including toothpaste, mouthwash, floss, soap, deodorant and shaving cream. Its flavors include fennel, orange-mango and apricot. According to Colgate, Tom's is the No. 1 natural oral care brand in America, with a 60 percent market share.
Tom Chappell said the sale is necessary to help his $50 million company further expand into the mass market, while still remaining true to values such as powering its factory with wind energy and donating 10 percent of pretax revenues to programs benefiting the environment, the needy, arts and education.
"The agreement we have worked out succeeds in preserving the character, spirit and values of our company as we grow," Chappell said in a statement. "Colgate has a commitment to product excellence, to global efforts to promote oral health, and has a 200-year history of caring for consumers and giving back to the community."
Tom's will continue to operate under its own label and will remain in Kennebunk. Chappell said there are no plans to lay off any of the nearly 200 employees or to cut programs such as paid leave for workers who give birth to or adopt a child, or one paid day off a month for employees who want to volunteer in their communities.
Scott Van Winkle, an analyst in the natural personal care products arena, said he expects Colgate to honor those promises, although it will probably impose "more of a corporate culture" on Tom's.
"Colgate has to keep [Tom's] the same for its brand integrity to remain," said Van Winkle, managing director of equity research for international investment firm Canaccord Adams. "I can't imagine seeing the Colgate label on Tom's products anytime soon."
Van Winkle said the fact that an $11 billion company like Colgate is willing to pay a valuation of $119 million for Tom's gives "a lot more validation for the natural personal care category." According to Colgate statistics, the U.S. market for natural oral and personal care products is worth $3 billion and is growing at 15 percent a year.