BW Confidential - Issue #16 - November/December 2013 - (Page 60)

Strategy M&A analysis credit: istock Coming together BW Confidential analyzes recent M&A activity in beauty and what it means for the market by Alex Wynne A fter a slow start to the year, it seems that M&A activity in the beauty space is heating up, if transactions announced over the summer are anything to go by. August —normally a relatively quiet time—saw a flurry of deals, including Revlon’s purchase of The Colomer Group from CVC Capital and L’Oréal announcing the acquisition of China’s Magic Holdings. “In terms of the volume of deals you’ll see an increase in the back half of 2013 and a material increase in 2014,” Steve Davis, managing director head of the beauty and personal care practice at Intrepid Investment Bankers, predicts. The growing consolidation of the beauty market over recent years—P&G’s integration of Gillette or Unilever’s purchase of Alberto-Culver being among the biggest deals—implies there are tangibly less players on the market for takeover. This means that deal sizes are continuing to decrease, despite a keen acquirer backdrop. “Generally you have people sitting there with quite a lot of cash on their balance sheets, who are willing to buy,” says UBS head of European health and personal care and luxury products research Eva Quiroga. “But targets aren’t as plentiful.” “There aren’t a lot of assets out there,” Intrepid’s Davis agrees. “There are only so many large acquisitions you can make. Beauty’s major deals 2012-2013 August 2013 L’Oréal/Magic Holdings, China L’Oréal’s acquisition of Hong Kong-listed Magic Holdings International, a specialist in face masks with 2012 sales of €150m, is expected to boost L’Oréal’s position in China’s mass-market category, and is valued at an estimated HK$6.54bn ($843m). 60 August 2013 Revlon/The Colomer Group, Spain Revlon’s $660m cash purchase of The Colomer Group from CVC Capital Partners will give the company a presence in professional markets and allow it to strengthen its presence outside the US. Closing is expected in fourth quarter 2013. April 2013 L’Oréal/Interconsumer Products, Kenya Interconsumer reported sales of €15m in 2012 and manufactures and distributes mass haircare and skincare in East Africa. L’Oréal has pinpointed Africa as a major region for future growth. January 2013 Li & Fung Limited/ Lornamead Group, UK Li & Fung intends to expand its beauty footprint globally, especially in Asia, through the purchase of the Lornamead mass-market portfolio. November-December 2013 - N°16 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #16 - November/December 2013

Cover
Comment
Contents
Update
Brand & retail news recap
Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Coty ceo Michele Scannavini
Insight: Fragrance
Category overview
Regional breakdown
Launch strategies
The niche market
Retailer initiatives
Launch roundup
Strategy M&A analysis
Retail
The store of the future
Creative strategies
Store concepts
Digital Innovation strategies
Market watch: Brazil
Country overview
Natura & Grupo Boticário
International brand strategies
Prestige retailing
Trendwatch Upcoming innovation
Travel retail
Channel analysis
The CIVETs
Digital strategies
Interview: L’Oréal Luxe md travel retail worldwide Barbara Lavernos
Interview: WDFG global head of beauty Antonin Carreau
Radar Up-and-coming brands
Emerging markets Company profile: Shanghai Jahwa
Packaging
Luxury packs in the BRICs
Luxury innovations
Industry viewpoint
Last word Euromonitor International senior analyst beauty and personal care Oru Mohiuddin

BW Confidential - Issue #16 - November/December 2013