Colgate to buy GABA
Colgate-Palmolive extended its share of the world oral care market by announcing the purchase of privately-held GABA International, a Swiss oral care products company. While Colgate's main strength is in retail (it is #1 in this field in Europe and in the world), GABA has products oriented to dental clinics, including Elmex (toothpaste for sensitive teeth), Meridol (balm for the gums), and Aronal (gum protection). The acquisition, with a cost of in the range $600-800 million, is Colgate-Palmolive's first major acquisition in seven years. GABA's sales, particularly in the growing dental detailing segment, add up to about $300 million in 11 countries.
In a Wall Street Journal article, "Colgate to Buy Switzerland's GABA (12/10/2002), the oral care products industry generates around $17 billion worldwide. Colgate is the leader with $3.5 billion, a 2% share. P&G (Crest) has a 13% share.
The GABA acquisition comes as Colgate-Palmolive's North American growth has run out of steam and as P&G is gaining traction in tooth care in Europe. Note also that Colgate sold its European detergent brands to P&G earlier this year, as it concentrates more and more on the oral care market. Colgate may be reaching limits on internal growth, either through market expansion, developing new products, and extending old ones. The solution is to acquire new products and markets, while not straying from the core business.
