6 months ago
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As it mulls a potential listing on the stock market, personal care and home improvement products company Fleetwood Jamaica Limited has acquired aromatherapy solutions company Starfish Oils Limited, paying $70 million for the operations and assets.
The purchase also includes the trademark of the company that had been on the brink of closure up to the beginning of this year.
Fleetwood CEO Richard Coe said that as part of the takeover, his 50-year-old company has brought on board five of the 10 members of Starfish staff, and machinery. The acquired business will be subsumed under Fleetwood itself, but the Starfish Oil brand will remain.
Starfish was previously owned by Jamie and Leslie Chang as majority shareholders, and Stella Rosen as a minority partner.
Its physical assets have been transferred from its former operating base at Bell Road in the industrial belt of Kingston to Fleetwood’s 30,000-square-foot facility at Poor Man’s Corner in Yallahs, St Thomas, a neighbouring parish to Kingston.
Some 4,000 square feet of space was allocated to the Starfish equipment.
Coe said he would soon be installing six repurposed shipping containers to increase storage space at the Yallahs complex. The property occupied by Fleetwood is leased space that’s owned by the Factories Corporation of Jamaica. His company is hamstrung in putting up additional buildings because it does not own the property, he said.
While Coe disclosed the cost of the acquisition as $70 million, he declined to say how it was financed, but noted that the company did not take on debt in the acquisition.
Coe said that for several years, Starfish had been scouting the landscape for a buyer, but after several failed negotiations, the company was at a point where it was facing closure and possibly being wound up.
He was alerted to the company’s circumstances by a colleague and entered into negotiations to secure a deal.
“We saw an opportunity not just to save it, but to grow the business, because there is huge potential in the product offering and to grow the range of products that we’re bringing to market,” Coe said.
In a release, Fleetwood said Starfish Oils experienced 26 per cent growth in revenues to $67.4 million. However, “a significant increase in operating expenses has impacted income gains”, Fleetwood reported. The expenses pushed Starfish into loss territory at $1.2 million.
Coe is not deterred by the losses, saying Starfish would benefit from its association with Fleetwood.
“We understood the potential of this deal. In subsuming the operations of Starfish, we did so without taking on any of their liabilities,” he told the Financial Gleaner.
Coe says while there were several teething pains, the integration has gone well and it is now fully operational. Starfish Oils offers a wide range of aromatherapy products, including bath oils, scented candles and body rubs.
Fleetwood itself specialises in two key product lines through two separate divisions: Fleetwood Home Improvements, manufacturer and distributor of household cleaning and home improvement products; and Orion Manufacturing Services, which distributes personal care brands, locally, including Revlon and Crème of Nature. Orion also manufactures and distributes its own sanitisation, laundry and personal care lines, such as Smart Hand Sanitisers, Glory Laundry Detergent, and the Amazon top-seller, Top Brass Anti-Dandruff Hairdressing. In 2016, the company established its own haircare brand, Zimii Haircare, which is sold in Jamaica as well as the United States, Canada, and Eastern Caribbean islands.
Coe says both operations can benefit from bulk purchases since they both use some common inputs.
As to the possibility of Fleetwood going public via the stock market, Coe said it was under active consideration, but would not comment on the timing nor whether its approach would be the junior or main market of the Jamaica Stock Exchange.
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