Cussons acquires Childs Farm for £37m

Manchester-based consumer products company PZ Cussons announced it has acquired Childs Farm, the UK baby and child personal care brand, for about £37 million in cash.

“Joanna Jensen, founder of Childs Farm, has subsequently made an investment into the PZ Cussons subsidiary that completed the acquisition such that PZ Cussons now holds a c.92% interest in Childs Farm for a total consideration of £36.8 million, with an agreed path to full ownership by the end of May 2025 … ” said Cussons. 

“The brand is highly complementary to our strategic focus behind the core categories of Baby and Hygiene …

Childs Farm has grown rapidly since it started trading in 2011, at highly attractive gross margins, and has established very strong sustainability credentials, through its cruelty-free and vegan products, and is well-progressed towards B Corp certification.

“Childs Farm’s founder, Joanna Jensen, will continue as an investor and as a champion of the brand, in both the UK and abroad.”

PZ Cussons CEO Jonathan Myers said: “As we transition from turnaround to transformation, we are delighted to take this important step to accelerate growth in our core categories and priority markets.

“Over the past decade, Joanna and her talented team have built a category-leading brand, loved by millions of parents seeking the very highest quality products for their children.

“Childs Farm is a clear leader in sustainability, demonstrating that we share a strong ethos, as PZ Cussons journeys towards our own B Corp ambition.

“We look forward to welcoming Childs Farm to the PZ Cussons family as a Must Win Brand, and to driving the next stage of its growth both in the UK, and beyond.”  

Jensen said: “I am incredibly proud of the brand that Childs Farm has become, and what the team at The Barn have achieved to bring natural, sustainable sensitive skincare to the little ones of Britain and beyond.

“It is clear to me that in PZ Cussons, with our shared vision for the brand and cultural fit, we have found a fantastic partner, and the team and I look forward to working with them to take the business to the next level.”

In the deal, PZ Cussons Acquisition Co Limited (PZCA), an indirect subsidiary of PZ Cussons, has acquired Tadley Holdings Limited for £36.8 million, which includes the repayment of £3.1 million of shareholder loans, based on an enterprise value of £40 million.

Childs Farm founder Jensen has invested £3.3 million of her proceeds in PZCA and now holds 8.1% of the issued share capital of PZCA.

A mechanism is in place which requires Cussons to purchase Jensen’s shareholding in two equal tranches following the end of the May 31, 2024, and May 31, 2025, financial years “at a price based on a 6.6x multiple of the lower of actual gross profit of Childs Farm and its forecast gross profit, subject to a cap of £32.5 million.”

For the year ended December 31, 2020, Childs Farm’s reported gross revenue was £17.4 million.