Fleetwood’s Clever Acquisition of Starfish Oils

How do you get all the goodies with none of the drama? Jamaican manufacturing and distribution company, Fleetwood, just took us to school with their recent acquisition of Starfish Oils. So Fleetwood recently completed a really interesting acquisition of aromatherapy brand, Starfish oils.

You might not be familiar with Fleetwood itself, but the company has been in business for over fifty years. They manufacture several popular brands like Top Brass, Zimii Haircare and Glory Laundry Detergent. Yup, that’s all Fleetwood. Those brands fall under the company’s manufacturing and distribution arm, Orion. They also used to distribute international brands like Revlon and Creme of Nature.

Additionally, they sell paint and cleaning supplies under their Fleetwood Home Improvement division. 

Back in January, the company bought Starfish Oils, an aromatherapy brand, for J$70 million.  That’s about US$450,000.

Now you’re probably wondering what’s the big deal about this acquisition. Well, it’s the way the deal was structured that intrigued me.

Fleetwood CEO, Richard Coe explained on Taking Stock.

“What we did was to buy the business, not the company. We didn’t buy the legal person i.e. the business that owns the receivables and assumes all of the debt. What we carved out was the assets of the company, so the inventory, the machinery and the trademarks so those were the assets that we carved out,” Coe said.

When I first heard this, I was like, that’s interesting. So essentially they bought the brand Starfish Oil with all its physical and intellectual properties but didn’t buy the actual company that owns the brand.

And since they didn’t buy the actual company, Fleetwood doesn’t take on any of Starfish’s liabilities. So if Starfish owed somebody some money, Fleetwood doesn’t become responsible for that.

Earlier in the interview, Richard explained that Starfish was in a tight spot and not maximising its potential, so the previous owners were actively looking for a buyout.

Since Fleetwood bought Starfish’s trademarks, Fleetwood will not have to pay royalties to the previous owners.

Meanwhile, Starfish as a company is now essentially a shell company and is in the process of winding down. 

I mean, this sounds like a WIN for Fleetwood. They get a fully fleshed-out and established brand, but none of the hassle of trying to fix the business back end. 

And with 50 years of experience and network connections in manufacturing and distribution, they also skip some of the logistical growing pains. If you’re an entrepreneur, it’s a strategy that you may want to consider when looking at potential acquisitions.

And that’s the bottom line.