Church & Dwight Co., Inc. -- Moody's says Church & Dwight's acquisition of ZICAM is credit negative due to higher leverage, but ratings unaffected

Announcement: Moody's says Church & Dwight's acquisition of ZICAM is credit negative due to higher leverage, but ratings unaffected

Global Credit Research - 03 Dec 2020

New York, December 03, 2020 -- Moody's Investors Service, ("Moody's") commented that Church & Dwight Co., Inc.'s (Church & Dwight) completion of the acquisition of ZICAM(TM) is credit negative because it will increase leverage. However, the transaction does not affect the company's A3 rating and stable outlook because leverage remains within Moody's expectations for the rating and the acquisition creates operating benefits by increasing the company's revenue base and product diversity.

The $530 million purchase price was financed primarily with cash on hand and investments, plus commercial paper issuance. Moody's estimates that pro forma financial leverage (adjusted debt to EBITDA) for the acquisition will increase to about 1.9x from 1.6x for the twelve months ending September 30, 2020. Moody's expects Church & Dwight to remain acquisitive, but maintain fairly conservative financial policies with debt-to-EBITDA declining to about 1.7x in 2021. In its most recent credit opinion published on October 30, 2020, the rating agency indicated that debt-to-EBITDA sustained above 2.5x, among other factors, could lead to a rating downgrade. ZICAM shortens the duration of a cold using zinc as the core active ingredient. Church & Dwight expects ZICAM to generate about $90 million in sales and $36 million in EBITDA in 2021.

For additional information, please see the issuer comment posted to www.moodys.com.

Church & Dwight, headquartered in Ewing, NJ, designs and markets a broad portfolio of branded household and personal care consumer products. Brands include Arm & Hammer, Trojan, First Response, Nair, OxiClean, Orajel, and Waterpik, among others. The publicly-traded company generates roughly $4.7 billion in annual revenues.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Chedly Louis VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 John E. Puchalla, CFA Associate Managing Director Corporate Finance Group JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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