Energizer Holdings, Inc. (NYSE: ENR) made two announcements this morning, and as a result its stock is dropping over 5% in morning trading. Energizer announced the acquisition of the Edge and Skintimate shaving cream business of
Starting with the stock offering: Energizer said it would use the net proceeds from the offering to pay for the deal with S.C. Johnson and for general corporate purposes, including the repayment of debt. The offering includes an option for the underwriters to buy up to 1.425 million more shares to cover any over-allotments.
As for the acquisition: Energizer bought its Schick-Wilkinson Sword razor business back in March 2003 from Pfizer Inc (NYSE: PFE). The business ranks second behind Procter & Gamble Co's (NYSE: PG) Gillette, which sells its own shaving creams and gels. It makes sense then for Energizer to buy a shave preparation business as a natural expansion to the existing business, but perhaps the choice of product -- one that has suffered significant market share declines in the past years -- is questionable.
Energizer has not been immune to the effects of the recession and the impact of the rising dollar on its revenue as its second quarter results from two weeks ago demonstrate. While ENR has been quite solid, outperforming the S&P 500 over the past year, other opportunities out there may be more enticing these days.
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