Church & Dwight to Acquire Consumer Products Business of Carter-Wallace in a Joint Venture With Kelso.

Business Editors

PRINCETON, N.J.--(BUSINESS WIRE)--May 8, 2001

Combination Will Create a $500 Million U.S. Personal Care Business and

Expand International Presence;

Transaction is Expected to be Accretive in First Year

Church & Dwight Co., Inc. (NYSE:CHD) today announced that it has reached a definitive agreement to acquire the consumer products business of Carter-Wallace, Inc. (NYSE:CAR) in a partnership with the private equity group, Kelso & Company, for a total price of $739 million, including the assumption of certain debt. Under the terms of its agreements with Carter-Wallace and Kelso, Church & Dwight will acquire Carter-Wallace's U.S. antiperspirant and pet care businesses outright for about $128 million; and ArmKel, LLC, a 50/50 joint venture between Church & Dwight and Kelso, will acquire the rest of Carter-Wallace's domestic and international consumer products business for $611 million. Church & Dwight expects to account for its interest in ArmKel on an equity accounting basis.

Carter-Wallace's consumer business is estimated to have sales of more than $500 million and EBITDA of approximately $100 million. In recent years, sales have increased at around 6% and EBITDA at nearly 20% a year, primarily through internal growth. Major brands include Arrid(R) antiperspirants, Trojan(R) condoms, Nair(R) depilatories, First Response(R) pregnancy test kits, Pearl Drops(R) toothpaste and Lambert Kay pet care products. Approximately 60% of the sales are in the U.S., and the remaining 40% abroad, including Canada and the U.K. where Church & Dwight also operates, as well as Mexico, Western Europe and Australia.

Church & Dwight reported year 2000 sales of $796 million, of which consumer products were $634 million, and the balance was in specialty chemicals and related products. EBITDA before unusual items amounted to $101 million. Within the consumer business, about 25% of the total sales were oral and personal care products, led by Arm & Hammer(R) Dental Care(R) Toothpaste and Gum, and Arm & Hammer Antiperspirant/Deodorant. The remaining 75% consisted of laundry, deodorizing and other household products.

Early in April, the Company announced a tender offer to acquire USA Detergents, Inc. (NASDAQ:USAD), its partner in the ARMUS LLC laundry detergents joint venture. With this acquisition, which is expected to close later this quarter, Church & Dwight estimates that total 2001 sales will reach $1 billion, of which over $800 million will be consumer products.

Robert A. Davies, III, Chairman and Chief Executive Officer of Church & Dwight, commented, "We are excited by this opportunity to acquire Carter-Wallace's consumer products business directly and through ArmKel. The transaction will create a nearly $500 million U.S. personal care business with strong market positions in oral care and antiperspirants, and leading positions in condoms and depilatories, and provide us with the scale and capabilities to take full advantage of the significant growth opportunities available in all these categories. An added benefit is that it creates a $250 million international business and provides a platform for expanded international growth.

"Due to the substantial synergies, and other aspects of the deal, we believe the transaction can make a solid earnings contribution in its first year, and a significantly greater earnings contribution thereafter."

Church & Dwight and Kelso believe that there may be significant opportunities for synergies from the consolidation of manufacturing, distribution and corporate service functions. The integration process will be helped by the fact that both companies have major operations located in Central New Jersey. Based on very preliminary estimates, the Company expects that potential synergies will ultimately reach about $25 million a year, which will be shared between Church & Dwight and ArmKel.

Under the terms of its joint venture agreement with Kelso, Church & Dwight will have a call option to acquire Kelso's interest in ArmKel in three to five years after the closing, at fair market value subject to certain limits. If Church & Dwight does not exercise its call option, there are provisions for the sale of the assets after a certain period. The venture's Board will have equal representation from both sides, with Church & Dwight appointing the Chairman.

Church & Dwight estimates its financing needs for the purchase of Carter-Wallace's antiperspirant and pet care businesses and the initial capital contribution to ArmKel at approximately $240 million. In addition, as previously announced, Church & Dwight has $150 million of financing needs related to the USA Detergents transaction and existing debt, making the total requirements approximately $400 million. Church & Dwight has obtained a commitment letter from JPMorgan for a fully underwritten $500 million senior credit facility which will be syndicated in the bank and institutional markets.

The ArmKel venture itself will be financed with $229 million in equity contributions from Church & Dwight and Kelso and an additional $420 million in debt. ArmKel has obtained a commitment letter from JPMorgan and Deutsche Bank for $505 million to finance the debt portion of the joint venture balance sheet. Any debt on ArmKel's balance sheet will be without recourse to Church & Dwight.

The transaction is subject to approval by the Carter-Wallace stockholders, and to regulatory approvals and other customary conditions, including the satisfaction of bank financing conditions at the closing date. In addition, simultaneous with this transaction, Carter-Wallace and its pharmaceutical business will merge into a newly-formed company set up by pharmaceutical industry executives and backed by two well-known private equity firms. While Church & Dwight and ArmKel are not affiliated with the pharmaceutical venture, ArmKel has agreed to provide certain transitional services to help this venture with the start-up of its operations at Carter-Wallace's main Cranbury, New Jersey facility. The closing of the consumer products acquisition is conditioned on the closing of the pharmaceutical company merger. Church & Dwight currently expects these transactions to close late in the third quarter.

Mr. Davies added, "Church & Dwight and Carter-Wallace are both well-established consumer packaged goods companies, with roots dating back over 150 years. Both companies have been shaped in similar ways by their founding families, with a particular commitment to growth through product innovation. We see this transaction essentially as two fine organizations joining forces to build an even stronger business.

"This transaction will bring the same scale and focus to our personal care business as the USA Detergents transaction does to our household products business. With the completion of these two transactions, Church & Dwight, together with ArmKel, will have a well-balanced $1.4 billion portfolio of household and personal care brands, as well as a related specialty chemicals business, creating an outstanding foundation for the future growth of the Company."

Church & Dwight will host a conference call to discuss the joint venture with the investment community today, May 8, at 11:00 a.m. (ET). To listen, please visit the Investor Relations section of the Company's web site at www.churchdwight.com or dial 877-313-8514. A replay will be available shortly after the call through May 10. The replay number is 800-642-1687, access code 93623. In addition, the replay can be heard at www.churchdwight.com.

Church & Dwight Co., Inc. is the manufacturer of ARM & HAMMER consumer and specialty products.

All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking statements." These statements, including the statements above as to the impact of the proposed acquisition on earnings, revenue, one-time costs and synergies and the expected closing date of the acquisition, represent the intentions, plans, expectations and beliefs of Church & Dwight, and are subject to risks, uncertainties and other factors, many of which are outside its control. These factors, which include the ability of Church & Dwight to successfully integrate the operations of the consumer products business of Carter-Wallace into the joint venture and Church & Dwight, assumptions with respect to future revenues, expenses (including expenses related to the acquisition) and expected cash flows, the ability of Church & Dwight and the joint venture to finance the transaction on reasonable terms, and the outcome of contingencies, including litigation, environmental remediation and the divestiture of assets, could cause actual results to differ materially from such forward-looking statements. For a description of additional cautionary statements, see Church & Dwight's and Carter-Wallace's quarterly and annual reports filed with the SEC.