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Japan: Shiseido Enters Natural Cosmetics Market
Shiseido has made a dramatic entry into the natural cosmetics market by
acquiring Bare Escentuals, an American producer of mineral cosmetics.
In a deal worth US $1.7 billion, it is the Japanese cosmetic firm’s
biggest acquisition and the largest deal in the natural cosmetics
industry. |
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Bare
Escentuals is being bought for $18.20 a share, a 41 percent premium
over the average closing price of the last three months. Bare
Escentuals has been listed on the Nasdaq stock exchange since 2006.
The San Francisco-based company has shown remarkable growth,
expanding from a $20 million small outfit to a $600 million
business over 10 years.
Established in 1872, Shiseido is Japan’s largest cosmetics company.
The Tokyo-based company owns beauty brands such as Shiseido, Elixir
Superieur and Maquillage. Although Shiseido operates in over 20
countries, the bulk of its $7.5 billion sales are from its home
market.
By
acquiring Bare Escentuals, Shiseido has entered a fast growth and
highly profitable sector of the cosmetics industry. Global natural
cosmetic sales are growing by over 15 percent a year, with Bare
Escentuals one of the largest operators in North America. It is the
world’s leading producer of mineral cosmetics, marketing its
products under the i.d. bare Minerals, i.d. cosmetics, and Rare
Minerals sub-brands.
Organic
Monitor sees this as an important acquisition that gives synergy to
both companies. The purchase gives Shiseido access to the high
growth natural cosmetics market; it also helps the Japanese company
achieve its target of raising its overseas sales to 50 percent by
2017. The portion of Shideido’s overseas revenues is predicted to
rise from 38 percent to 42 percent as a result of the deal.
Bare
Escentuals will gain from Shiseido’s extensive distribution
infrastructure. About 85 percent of the American company’s sales are
from its home market. Export has been a major focus since the
company was publicly-listed in October 2006. However, it has yet to
make significant inroads in Europe and Asia. Organic Monitor expects
Bare Escentuals to utilise Shiseido’s distribution networks and
internationalise its sales. Premium channels, such as department
stores and beauty retailers, are most suited to the mineral
cosmetics range of Bare Escentuals.
The
purchase price of $1.7 billion may come as a surprise, since it is
almost three times Bare Escentuals revenues. However, previous deals
involving natural cosmetic firms have involved sale prices of up to
five times company’s revenues. With the global economy slowly coming
out of recession and investment restrictions easing, Organic Monitor
expects to see more such acquisition activity in the natural
cosmetics industry.
Related Report:
#7051-60
Strategic Insights: Mergers, Acquisitions & Investments in
Natural Personal Care Industry
Sustainable Cosmetics Summit
Investment activity in the natural cosmetics
industry will be featured in this new summit. Details will be given
of mergers, acquisitions and investments in the natural cosmetics
industry
as well as financing options
available to such firms. The Sustainable Cosmetics Summit
will take place at Grand Hyatt Hotel, New
York City (24-26th March 2010).
More details are on
www.sustainablecosmeticssummit.com
Posted: January 18th 2010
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