L’Occitane International SA agreed to buy beauty and skincare brand Elemis for about US$900 million, its biggest deal on record as the maker of organic lotions looks to expand in the US and the UK.
The Hong Kong-listed luxury cosmetics company agreed to buy the privately held Elemis from Steiner Leisure Ltd, a statement from the companies said on Sunday. Steiner is a portfolio company of private equity firm L Catterton, which focuses on consumer sector investments.
L’Occitane said the acquisition would help bolster the group’s growth globally, with plans to bring the Elemis marque, which is popular among millennial and Gen X consumers, into new markets.
Shares of L’Occitane yesterday fell as much as 3.2 percent in Hong Kong trading, narrowing its single-digit percentage growth this year. It has headquarters in Luxembourg and Switzerland.
With the Elemis deal, L’Occitane is likely to reach its 1.7 billion euro (US$1.95 billion) sales target in two years, according to a Bloomberg Intelligence note yesterday. L’Occitane could launch exclusive items for China, Hong Kong and the US, the three markets that are 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 officer Reinold Geiger said in a statement. “Elemis is well positioned for continued global growth.”
The deal is L’Occitane’s largest acquisition. In China, L’Occitane’s biggest sales market, consumers have shown a willingness to pay for premium and organic skincare, and cosmetics products. The company’s same-store sales in China rose 7.4 percent in the three months ending in September last year, 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 Web site. The company, which reported 1.3 billion euros in net sales and 142 million euros in operating profit in the last fiscal year, in 2010 listed in Hong Kong as it sought to expand in Asia.
The purchase would be funded by L’Occitane’s cash and bank borrowings, according to a company filing with the Hong Kong stock exchange.
The deal is expected to close in the first quarter of this year, it said.
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