SmithKline Beecham PLC to acquire Block Drug Co. for 1.43 times revenue

Weekly Corporate Growth Report, Oct 16, 2000

The Deal: The British drug company, SmithKline Beecham PLC has agreed to purchase Block Drug Co. for $1.24 billion. The deal will significantly expand SmithKline's toothpaste and dental-care business. After the news of the acquisition was announced, shares of Block rose 38 cents to $50.63, while SmithKline shares fell 31 cents to close at $67.44.

Discussion: Block Drug Co. is the maker of the Polident and Poli-Grip brands which have control of the denture cleaner and gel markets. The company also makes oral health care items such as Sensodyne toothpaste and Targon Smoker's Mouthwash, as well as professional products. Over-the-counter medications include Balmex diaper rash ointment, Tegrin dandruff shampoo, Nytol sleep aid and Goody's headache powder. Block Drug also makes Phazyme and Beano gas treatments.

SmithKline Beecham PLC makes such over-the-counter staples as Geritol vitamins, NicoDerm CQ antismoking patches and Aquafresh toothpaste. Its prescription drugs include antidepressant Seroxat/Paxil and vaccines for diphtheria, tetanus, whooping cough and hepatitis. SmithKline Beecham is working with Human Genome Sciences to break ground in genomic medicine. SmithKline Beecham sold its clinical laboratory operations to focus on its pharmaceutical business. The company has agreed to merge with Glaxo Wellcome to create one of the largest drug companies in the world.