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Topics Mergers & Acquisitions China Consumer Products
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A Chinese major in durable infant products is poised to acquire North American production assets.
Goodbaby International Holdings Ltd. has agreed to buy Evenflo Co. Inc. for US$143 million. Evenflo’s sales last year were US$208 million, according to documents filed with the Hong Kong Stock Exchange. The purchase agreement is binding but contingent on Goodbaby shareholder approval.
Goodbaby designs, develops, manufactures and sells products such as baby strollers. Evenflo makes a range of juvenile products, from car seats to feeding bottles sold through large retailers like Wal-Mart, Toys R Us, Target, Buy Buy Baby and Amazon.
Evenflo said in a June 6 news release that more than 70 percent of its sales are derived from items it makes in Piqua, Ohio, and Tijuana, Mexico. Goodbaby, based in Kunshan City, Suzhou, China, produces plastics-intensive goods in Kunshan and Ningbo, China.
Evenflo Chief Operating Officer Steve Strife said in a telephone interview that the company “has every expectation that Piqua will grow, whether through organic growth or through transfer of work from China.”
In a report in the Dayton Business Journal, Evenflo CEO Scott Weiss indicated Evenflo could announce expansion plans for Ohio by early 2015. Evenflo now employs about 400 in Ohio, about two-thirds in Piqua. The 500,000-square-foot Piqua plant has enough adjacent space to double in size. Piqua makes car seats and most of the Exersaucer products. In total, Evenflo employs about 700.
Strife said the first order of business after the deal is finalized is for Goodbaby and Evenflo to work out their commercial strategies, “and from that will flow the manufacturing strategies.”
“We don’t see work moving from Ohio to China,” Strife added. “In the last two years we have returned a lot of car seat production to Piqua as it became more cost effective.”
Piqua mainly injection molds car seat components and assembles the seats using soft components imported from China and purchased metal parts. Strife said Piqua’s injection presses have clamping forces of 800 tons and larger. He said the plant runs “more than 12 presses but fewer than 24.” It has 20 assembly lines making car seats.
Evenflo imports finished goods like strollers and jumpers from China.
Evenflo has high brand awareness in North America and leads in many juvenile categories with its Evenflo, Exersaucer and Snugli trade names. More than 90 percent of its sales are made in the United States and Canada. Its portfolio includes car seats, travel systems, safety gates, high chairs, play yards, activity centers, infant carriers, feeding bottles and doorway jumpers.
A key attraction to Goodbaby is Evenflo’s profile in juvenile car seats. The acquisition will boost Goodbaby’s portfolio to include mid-priced to value-priced safety car seats. Goodbaby, already a major in car seats, will be able to increase its share of the rapidly growing juvenile car seat market. Goodbaby’s lineup overlaps Evenflo’s in many categories, including strollers, in which it is a global player. Its stake in cribs, bicycles and some other durables would complement Evenflo product lines.
Goodbaby has been listed on the Hong Kong Stock Exchange since 2010. For the year ended Dec. 31, it logged sales of HK$4.19 billion (US$540.5 billion) and profit from continuing operations of HK$171.1 million (US$22.1 million). In addition to its own brands, it makes juvenile products such as strollers for third parties.
Earlier this year, Goodbaby made its first acquisition when it bought Cybex GmbH, a Bayreuth, Germany-based producer of premium car seats. The deal gave Goodbaby big exposure in Europe, where Cybex is a major brand, as well as an entry into high-end car seats.
Evenflo was established in Ravenna, Ohio, in 1920. Its headquarters is in Miamisburg, Ohio. Investment firm Weston Presidio of Boston bought the firm in 2007. Evenflo claims to hold top or second-largest market share positions in North America in several product categories.
In Mexico Evenflo makes safety gates and other wooden products.