L’Oc­c­i­tane in deal to bring Elemis into new mar­kets

Bangkok Post - - WORLD BUSINESS - DANIELA WEI DENISE WEE

HONG KONG: Lux­ury cos­met­ics firm L’Oc­c­i­tane In­ter­na­tional SA agreed to buy beauty and skin­care brand Elemis for about $900 mil­lion, its big­gest deal on record as the maker of or­ganic lo­tions looks to ex­pand in the US and UK. The Hong Kong-listed L’Oc­c­i­tane agreed to buy the pri­vately-held Elemis from Steiner Leisure Lim­ited, ac­cord­ing to a state­ment from the com­pa­nies on Sun­day. Steiner is a port­fo­lio com­pany of pri­vate eq­uity firm L Cat­ter­ton which fo­cuses on con­sumer sec­tor in­vest­ments. L’Oc­c­i­tane, which has head­quar­ters in Lux­em­bourg and Switzer­land, said the ac­qui­si­tion would help bol­ster the group’s growth glob­ally, with plans to bring the Elemis mar­que that’s pop­u­lar among mil­len­nial and Gen X con­sumers, into new mar­kets. The deal is the lat­est in a spate of ac­qui­si­tions of high-end skin­care brands in re­cent years, with de­mand for premium, nat­u­ral beauty prod­ucts on the rise in Asia. With the Elemis deal, L’Oc­c­i­tane is likely to reach its €1.7 bil­lion ($1.95 bil­lion) sales tar­get in two years, ac­cord­ing to a Bloomberg In­tel­li­gence note. L’Oc­c­i­tane could launch ex­clu­sive items for China, Hong Kong and the US, the three mar­kets which is driv­ing most of its rev­enue growth to off­set the slow­down in Europe, the note said. “It is a ma­jor step for­ward for L’Oc­c­i­tane in build­ing a lead­ing port­fo­lio of premium beauty brands,” chief ex­ec­u­tive Reinold Geiger said in a state­ment. “Elemis is well po­si­tioned for con­tin­ued global growth.” The deal is L’Oc­c­i­tane’s largest ac­qui­si­tion and fol­lows Natura Cos­meti­cos’ pur­chase of The Body Shop from L’Oreal SA for about €1 bil­lion in 2017. Unilever also ac­quired South Ko­rea’s big­gest maker of beauty prod­ucts, Carver Ko­rea Co, for €2.27 bil­lion in 2017. Growth in the global beauty mar­ket likely grew 5% last year, driven by Asia de­mand, ac­cord­ing to Bloomberg In­tel­li­gence. In Greater China, L’Oc­c­i­tane’s big­gest sales mar­ket, Chi­nese con­sumer have shown a will­ing­ness to pay for premium and or­ganic skin­care and cos­met­ics prod­ucts. The com­pany’s same-store sales in main­land China rose 7.4% in the three months ended last Sep­tem­ber, sig­nif­i­cantly out­per­form­ing its av­er­age gain world­wide. L’Oc­c­i­tane, with ori­gins in Provence, France, op­er­ates in 90 coun­tries with 3,285 re­tail out­lets, ac­cord­ing to its web­site. The com­pany, which re­ported €1.3 bil­lion in net sales and €142 mil­lions in op­er­at­ing profit last fis­cal year, listed in Hong Kong in 2010 as it sought to ex­pand in Asia. The pur­chase will be funded by L’Oc­c­i­tane’s cash and bank bor­row­ings, ac­cord­ing to a com­pany fil­ing to the Hong Kong Stock Ex­change. The deal is ex­pected to close in the first quar­ter of 2019.

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