Purell maker GOJO Industries explores options including a sale, sources say

Purell maker GOJO Industries is reportedly exploring a full sale or minority stake divestiture, with a potential valuation nearing $2 billion, engaging private equity firms and investment bank Harris Williams. This strategic exploration follows a previous unsuccessful sale attempt in 2023 and subsequent $500 million debt financing, as the privately-held company's sales have normalized post-pandemic surge, indicating a push to fund future growth amidst a more stable market environment.

Analysis

GOJO Industries, the privately-held maker of Purell, is exploring strategic alternatives including a full or partial sale with a potential valuation approaching $2 billion. This initiative follows a failed sale attempt in 2023, where bids from private equity and corporate suitors, such as Georgia-Pacific, did not meet the owners' valuation expectations. Subsequently, the company opted for a significant leverage event, taking on $500 million in new debt from Silver Point Finance to refinance existing obligations and fund operations. The current exploration, facilitated by investment bank Harris Williams, is occurring as the company's financials have reportedly 'normalized' following the demand surge experienced during the COVID-19 pandemic. This suggests that any valuation will be based on a more sustainable, post-pandemic earnings baseline rather than the peak performance of recent years. The company's stated rationale is to secure capital to fund future growth opportunities for its well-established brand.

Key Decisions for Investors

• Private equity investors should scrutinize GOJO's normalized EBITDA to determine if the near-$2 billion valuation is achievable, given the valuation gap that derailed the 2023 sale process and the addition of a $500 million debt burden.
• Credit investors should view this as a key case study; the company's move to take on significant debt after a failed M&A process highlights a potential trend for sponsor-backed or family-owned businesses with normalizing revenues, impacting the risk profile of both existing and prospective lenders in the consumer goods sector.
• Investors in publicly traded hygiene and cleaning products companies should monitor the outcome of this process for a valuation benchmark, as a successful transaction could signal private market appetite and potential M&A activity within the sector, while the commentary on 'normalized' sales provides a read-through for post-pandemic industry growth expectations.