Beauty M&A activity may have slowed down slightly in 2020, but there were still many major deals to be had. The year was ripe with public offering activity from the parent company of Perfect Diary, The Hut Group and VC-backed Hims, but also saw a billion-dollar makeup acquisition with the Puig-Charlotte Tilbury deal, as well as other meaningful transactions. Here are some of the most major beauty M&A deals of 2020.
KKR Buys Majority of Coty Professional
Coty Inc. inked a deal with major private equity firm KKR to sell a majority stake in its professional division, which includes Wella, OPI and Clairol. After some speculation that the deal had hit the rocks due to the coronavirus, Coty and KKR signed a joint venture agreement that gives KKR control of the division with 60 percent ownership. The move is meant to simplify the business, and allow for Coty leadership to fix the ailing consumer division (home of Covergirl) and accelerate the luxury segment, especially via skin care. In November, Coty said that it expected the deal to close before the end of the calendar year, and that its remaining 40 percent stake in the operation is valued at around $1.3 billion.
The Hut Group Files for IPO
The Hut Group, owner of Illamasqua, Eyeko and e-commerce retailer Lookfantastic, went public in September with a $7 billion initial public offering. The business has been growing, and saw sales rise almost 25 percent in 2019, to 1.1 billion pounds. “We anticipate substantial future growth and expansion across the beauty industry, which will continue to benefit our brands and our web sites. We expect subscription beauty boxes will continue to drive customer acquisition and loyalty, while our own prestige beauty brand portfolio will benefit from premiumization trends and rapid expansion through increased digital penetration and internalization,” said chief executive officer Matthew Moulding.
Kelsey Randall’s dress made from deadstock Sixties bedsheets under Matty Bovan’s cotton Liberty denim jacket with metal buttons and Carleen’s vest made from vintage quilts with Shuting Qiu’s tights and heels. Bea Bongiasca earrings; Gaviria necklace; Mounser necklace. VIEW GALLERY
Puig Acquires Majority Stake in Charlotte Tilbury
Charlotte Tilbury became the latest founder to score a billion-dollar beauty deal when Puig agreed to buy a majority stake in her business for what sources said was about 1.2 billion pounds. BDT Capital Partners also bought a stake in the business. For fragrance-focused Puig, the acquisition furthers exposure to the color cosmetics category, which the company has played in with Christian Louboutin Beauty and Carolina Herrera’s makeup line. The Charlotte Tilbury business also has an expanding and successful skin-care component, and was growing quickly — even during the COVID-19 pandemic. Multiple strategic buyers, including the Estée Lauder Cos., were said to have looked at the business.
Yatsen Files for IPO
In late October, Guangzhou Yatsen E-commerce Co., the parent company of skin-care brands Perfect Diary, Little Ondine and Abby’s Choice, filed for an initial public offering in the U.S. The deal would allow it to raise up to $100 million, and make it the first Chinese beauty company ever listed on the New York Stock Exchange. The business posted 3.03 billion renminbi in net income for 2019, about $457 million. Yatsen plans to use the money for operations and potential investments or acquisitions.
L’Oréal Purchases Mugler & Azzaro Licenses from Clarins
L’Oréal signed the deal to acquire the Mugler and Azzaro fragrance licenses from the Clarins Group in 2019, but it closed earlier this year. The brands generated about 340 million euros in sales in 2018. The acquisition gives L’Oréal further access to prestige designer fragrances, but also allowed Clarins to divest from fragrances entirely in order to focus on skin care. Mugler is known for Angel, an iconic gourmand scent, and Alien, a bestseller, while Azzaro’s portfolio includes classics like Azzaro Pour Homme and Chrome, and Wanted.
Hims Goes Public via SPAC Merger
In early October, venture capital-backed Hims said it inked a merger agreement with special purpose acquisition vehicle Oaktree Acquisition Corp. that values the company at $1.6 billion and would take it public. Hims, which also operates a business segment aimed at women called Hers, runs a telehealth operation that sells erectile dysfunction medication and birth control, as well as hair-loss prevention and skin-care products over the Internet. Founder Andrew Dudum said the deal will allow the business to work toward becoming “the front door to the health-care system, serving as the first stop for people’s health and wellness needs around hundreds of conditions” and that the brands would move into new categories going forward.
Ipsy to Acquire Boxycharm
Ipsy bought a major slice of the beauty-box competition when it agreed to acquire Boxycharm in October. The combined businesses are expected to form a powerhouse with more than $1 billion in combined sales in 2020 and enough subscriber data to very specifically tailor brand and product launches. Because of the deal, Ipsy also restructured the business, forming parent company Beauty For All Industries, which also includes incubator Madeby Collective, and will soon include a new brand called Refreshments launching later this year with “clean essentials,” like face wipes and hand cream.
KKW Cosmetics Sells 20 Percent Stake to Coty
Kim Kardashian West sold a minority position in her cosmetics brand, KKW Cosmetics, to Coty, following in the footsteps of younger sister Kylie Jenner, who had previously inked a majority deal with Coty. For KKW, the licensing deal puts Coty in charge of developing skin care — the biggest focus right now — as well as personal care, hair care and nail care. But for Coty, the deal is pivotal to broader plans to accelerate growth in skin care, which it plans to do through KKW and through Kylie Skin.
Nestlé Health Sciences Acquires Majority of Vital Proteins
Nestlé Health Sciences agreed to buy a majority stake in Vital Proteins, an ingestible collagen business that makes powders, beverages and foods. The deal underscores burgeoning interest in the wellness category, and in beauty-wellness products. The deal is meant to help provide Vital Proteins, which will continue to operate as a stand-alone business, with resources to further innovate and scale operations.
L’Oréal Acquires Thayers
L’Oréal upped its exposure to the natural beauty space with the acquisition of Thayers Natural Remedies, a brand best known for its witch hazel and toners. The brand will live in L’Oréal’s Consumer Products Division, which also contains L’Oréal Paris, Garnier and NYX. Alexis Perakis-Valat, president of that segment, said the brand was part of L’Oréal’s strategy to develop its skin-care business globally, and that Thayers complemented L’Oréal’s North American skin-care brand portfolio.
Article courtesy of WWD here