P&G Stays Philanthropic, Sheds PUR

The world’s leading consumer goods and household product manufacturer Procter & Gamble Co. (PG - Analyst Report) recently completed the divestiture of its PUR water purification products business to Helen of Troy Limited (HELE - Snapshot Report). However, the terms of the transaction were not disclosed. Despite disposing the PUR business P&G retained the corporate philanthropic program associated with the business and rebranded it with the corporate logo, “P&G Purifier of Water”.

In the growing water purification category, PUR is a well known name that sells and markets a variety of high-quality water filtration products. The PUR products include faucet mount systems and filters, pitcher systems and filters, and refrigerator filters, and are available throughout the United States.

El Paso, Texas based Helen of Troy had previously signed a definitive agreement with P&G to acquire all the assets of the PUR business in early December, 2011. Helen of Troy expects the newly acquired business to record sales of $110 million in 2012. The company also expects the business to be accretive to its earnings immediately.

Helen of Troy plans to integrate the PUR business with its Healthcare/Home Environment segment. The segment sells branded health care devices such as thermometers, humidifiers and heating pads, and small domestic appliances such as air purifiers, portable heaters, fans, and bug zappers.

As per the newspaper Advertising Age, the market for water purifier, which is currently dominated in the U.S. by The Clorox Company’s (CLX - Analyst Report) Brita brand, is expected to grow considerably both in the U.S. and globally. Moreover, Unilever Plc. (UL - Analyst Report) has set a target of providing safe drinking water to 500 million people by 2020 with its PureIt water-filtration brand.

P&G, the parent company of well-known consumer brands like Tide, Downy, Pampers and Crest, acquired the water filtration systems, PUR from water purifier manufacturer Recovery Engineering Inc.

However, the retail giant decided to sell the business as it perceived that the water purification business was not core to its long-term strategy. Tom Finn, the president of P&G, stated that with the disposition of the PUR business, the company can better focus on its core businesses going forward.

However, P&G has not parted with the water purification technology that drives its Children's Safe Drinking Water Program. The powder product and patents used in that program will remain with P&G.

The product is a packet of powder developed by P&G in collaboration with the U.S. Centers for Disease Control and Prevention (CDC). The powder is distributed through the Children's Safe Drinking Water Program. The product is capable of purifying water anywhere in a simpler, more affordable and convenient way. The team also provides the product to the governments in need at no-profit basis.

Currently, we prefer to be Neutral on P&G. Furthermore, P&G holdsa Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.