A Toothpaste Company Is Selling Soap. Here's Why That's Normal.

It sounds like a category error on its face: a toothpaste company selling soap.

Colgate-Palmolive is exploring the sale of Softsoap, Irish Spring, and Speed Stick — three household names from the personal care aisle. The company hired Goldman Sachs to run the process, and the brands could bring in over $1 billion. The stock ticked down 0.3% on the news, which is to say the market shrugged.

That was the right reaction, if you understand what the transaction actually is. This isn't Colgate abandoning a business. It's a $70 billion company pruning the least profitable corner of a crowded shelf, and it's following an exact playbook that every consumer-goods giant has been running for the better part of a decade. The useful question for an investor isn't whether the sale will happen — it's whether this kind of portfolio cleanup is enough to change the economics of a stock trading at 34 times earnings.

Let's work through the machinery.

What Colgate actually owns

Colgate-Palmolive looks like four businesses but operates mostly as one. Oral care — the namesake toothpaste and toothbrush business — accounts for nearly half of the company's roughly $20.4 billion in annual revenue. The rest is split among personal care (soaps, deodorants, skin care), home care (cleaners, detergents), and pet nutrition, primarily through Hill's Pet Nutrition, which Colgate acquired in 2024.

Personal care specifically generated about $3.5 billion in revenue last year — roughly 17% of the total. Softsoap, Irish Spring, and Speed Stick sit at the mass-market end of that segment. They're commodity brands. You can find them in any supermarket at a price point where differentiation is thin and retail shelf-space battles are fierce. The companies that own them compete largely on volume and distribution, and the margins don't move like oral care margins do.

That matters because margins are what separate a portfolio you keep from a portfolio you sell.

Why these brands and not others

The clearest reason is what happened to Colgate's other bet on personal care's premium end.

Last year, Colgate took a $919 million charge — a non-cash write-down of the goodwill and intangible assets tied to Filorga, a French skincare brand the company had acquired earlier. The impairment came because Filorga's growth, especially in China, fell short of what was priced into the acquisition. In accounting terms, the company acknowledged the brands were worth less than it thought. In operating terms, the company now knows that premium skin care is harder to scale than toothpaste.

So here's the picture on both ends of the personal care spectrum: the premium brand Colgate bought into underperformed and got written down, while the mass-market brands it's been holding for decades are fighting intensifying competition in its home market. CEO Noel Wallace has said publicly that North America needs a "long-term turnaround" and cited intensifying competition there. Full-year North American organic sales fell 1.6% last year, and the most recent quarter showed a 3% decline.

The mass brands aren't losing money, necessarily. But they're earning less than the cost of the attention and infrastructure that Colgate deploys. In a company that generates 60% gross margins, the low-margin, high-volume soapy end of the portfolio starts looking like dead weight relative to oral care and Hill's pet food — the two businesses that actually drive earnings.

When you hold 41% of the global toothpaste market, you don't need to own the second-tier bar soap brands to stay a consumer-goods company.

Who buys soap from a toothpaste company

This is the part that turns the story from "Colgate is selling brands" into "here's a repeatable financial pattern."

The buyers for these brands are almost certainly private equity firms — the same ones that have been acquiring consumer staples portfolios at a relentless pace. In 2024, Yellow Wood Partners bought more than 20 beauty and personal care brands from Unilever (the Elida Beauty portfolio, including Q-Tips and Caress). This September, Nestlé agreed to sell its vitamins and supplements business to Yellow Wood for $1 billion — the same buyer, the same deal size range, the same brand profile.

Unilever went further: in 2025 it agreed to sell its entire food business to McCormick for $45 billion, stripping itself down to a pure-play personal care and home care company.

The incentive structure is straightforward. The CPG parent owns brands that generate stable, predictable cash flow but no longer fit the company's strategic focus. A private equity buyer sees those cash flows as exactly the kind of asset a leveraged buyout can work on — steady revenue that supports debt service, with room for operational improvements like pricing, cost optimization, and category expansion. The PE firm doesn't need the brand to be the parent company's core growth engine. It just needs the brand to cover its interest payments and grow enough to exit five to seven years later.

Colgate gets cash now. The PE firm gets a portfolio it can optimize with a different cost structure and time horizon. Neither side is desperate. That's why these deals happen.

What $1 billion does to a $70 billion company

This is where the arithmetic gets unromantic.

$1 billion is more than 1% of Colgate's roughly $70 billion market capitalization. On a company that brings in $20.4 billion in annual revenue, it's about 5% of the top line. The proceeds would be material to a mid-cap company but modest for one of this size.

The more relevant number is the multiple the stock trades at. Colgate's price-to-earnings ratio sits around 34 times trailing earnings. That's the price investors pay for the stability and dividend reliability of a 24-year dividend growth streak — currently yielding 2.4%. A $1 billion sale, even if it adds directly to free cash flow, would add roughly $1.50 to $2.00 per share in one-time value on a per-share basis. At current multiples, that's a fraction of a percent of the stock price.

The real value of a divestiture like this is usually in the restructuring it enables, not the cash it generates. If Colgate redirects the operating resources — marketing spend, management attention, manufacturing capacity — from Softsoap and Irish Spring to higher-margin oral care and pet nutrition, the earnings power of the remaining business goes up. That's the point of portfolio simplification. You don't sell to collect the check. You sell to stop subsidizing the parts that drag down the whole.

But that only works if the redirecting actually happens. Colgate's 2026 guidance calls for organic sales growth of 1% to 4% and low-to-mid single-digit base-business EPS growth. Those are modest targets from a company that's already growing its pet nutrition segment by roughly 3% annually. A small portfolio trim doesn't transform that into an earnings inflection.

What the investor carries away

The divestiture itself is a normal operating move for a consumer-goods company at this size, not a signal of distress or a dramatic strategy shift. It's what happens when a portfolio gets wide enough that the margin differences between segments start to matter. Colgate is trimming the low-margin mass brands from personal care because its highest-margin businesses — oral care and pet nutrition — don't need the distraction.

For a shareholder, the move is neutral-to-slightly-positive. It removes complexity and potentially frees capital, but it doesn't change the growth trajectory of a business that's growing organically at single-digit rates. The stock's 34x multiple already prices in the stability of those single digits. The sale doesn't add a new growth story; it just cleans up the old one.

The question isn't whether Softsoap has a buyer. It's whether Colgate can grow what it keeps faster than the multiple suggests it should. That's a business execution question, not a divestiture question. The soap sale is just the evidence that management knows the difference between the two.