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Summer Infant seeks targets to bottle up

by Richard Collings | Published January 31, 2012 at 4:55 PM

Summer Infant Inc. is looking for acquisitions, according to chief executive Jason Macari.

The listed Woonsocket, R.I.-based maker of baby products is targeting small strategic bolt-ons as well as larger transformative deals, Macari said. He made the comment during an interview conducted at the 14th annual ICR XChange Conference held in Miami from Jan. 10-12.

Macari said a company such as Skip Hop Inc. could be an attractive target, for example, after it grows in size.

In the first half of last year, New York-based Skip Hop Inc. sought to either arrange debt financing or to sell a stake in the company to a private equity investor in an effort to accelerate the company's growth, according to owner Michael Diamant, who co-founded the business with his wife Ellen.

Diamant said Skip Hop generated $20 million in retail sales in 2010. Its products include diaper bags, infant developmental toys, toddler backpacks, baby and toddler feeding accessories, bath toys and safety accessories, as well as bedding and nursery décor.

Macari, though, said Summer Infant has the appetite for a much larger transformational acquisition, perhaps targeting a company with a valuation of more than $100 million. Such an acquisition would be made by issuing new shares in Summer Infant to the sellers, and avoid levering the company with any more debt, he said.

Summer Infant estimated that it had cash and cash equivalents of about $2 million and long-term debt of $63 million in a 10-Q filed with the Securities and Exchange Commission on Nov. 10. Its revenue for the nine months ending Sept. 30 was $183 million, a 28% increase from the $143 million it earned the same period a year earlier.

Macari said it is unlikely that Summer Infant would target a company such as privately held North Hills, Calif.-based baby products manufacturer Munchkin Inc., as it is much too large, with profits in excess of what Summer Infant generates. Munchkin, according to The Wall Street Journal, had revenue of $158 million in 2010.

A similar company in the infant-related category includes private El Segundo, Calif.-based Little Twig.

Summer Infant's latest deal was its March 28 acquisition of BornFree Holdings Ltd., a maker of baby feeding products such as a BPA-free nursing bottle. Terms of the deal were not disclosed. BornFree had net sales of $16 million in 2010. Summer Infant financed the acquisition through a combination of stock and debt.

Separately, Summer Infant announced Jan. 26 that chief financial officer Joseph Driscoll will leave his position soon after the company files its 2011 annual report. A search is under way for his replacement.

Summer Infant closed at $5.36 per share Tuesday, giving it a market capitalization of $93.4 million.

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Summer Infant seeks targets to bottle up

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