CAA Industries could soon acquire Porcelana skin whitening brand

CAA Industries could soon acquire Porcelana skin whitening brand

This month the health and beauty products maker announced that the company has entered a license agreement with Ultimark, giving CAA rights to sell the Porcelana brand globally.

The global marketing rights deal is really just the first step by CAA Industries toward acquiring the brand. Though for now, the acquisition exists only as an option. Indeed, the agreement, which took effect at the start of April 2017, gives CAA a one-year option to buy Porcelana for just over $3m.

“This license agreement gives CCA a 12-month runway to affect a smooth transition and verify due diligence for valuation purposes,” Lance Funston, CEO of CAA, says in a press release about the deal.

Expectations

The Porcelana skin whitening formula was developed some 46 years ago. And last year, thanks to sales at retailers including WalMart, RiteAid, and Walgreens, the brand reported gross annual sales of close to $2m.

“Porcelana has experienced steady growth in recent years and the strength of CCA's distribution network should enhance its performance over time,” Funston tells the press, adding that “the brand fits our strategic objective by increasing CCA's skin care portfolio and complements our Sudden Change brand.”

Revitalization

In recent years CAA has made strong strategic choices to refresh the company with the end goal of ensuring profitability for its stakeholders in the foreseeable future.

For instance, Richard Kornhauser served a short term as CEO until the start of this year. He took on the role in late 2013 and for the past year has had three clear objectives. As Funston tells it, “One year ago, I asked Rick to accomplish three goals, transition from component manufacturing to turnkey manufacturing for which we have made considerable progress, make significant reductions in administrative overhead costs and complete the transition to Emerson Healthcare, a third party back office accounting and sales team.”

And as Funston explained earlier this month when announcing the company’s full year 2016 financial results, “The Company's return to profitability is due to the restructuring plan which was completed in the third quarter of fiscal 2016.  This has put the Company on a more stable platform enabling us to now turn our attention to increasing top line sales through the introduction of new products and expansion of retailer distribution.  We will also have resources to increase our internet presence.  We look forward to continuing profitability in fiscal 2017 and continuing to enhance shareholder value.”

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