The biggest M&A deal of French cosmetics giant L'Oréal

French cosmetics group L'Oréal has agreed to buy Australian luxury cosmetics brand Aesop from Brazilian company Natura.

The acquisition deal is subject to regulatory approval and will be settled in cash on closing, which is expected to occur in the third quarter of 2023.

This is L'Oréal's first large-scale M&A since May 2021 (after CEO Nicolas Hieronimus took over the company), and also the company's largest merger in the past 25 years, according to S&P Global Capital IQ.

This deal marks a rather different move for L'Oréal, as they are acquiring a brand that is quite famous in the world . Previously, this group often acquired new brands on a smaller scale to develop the market and increase sales.

Françoise Bettencourt Meyers inherited a third of the shares of the cosmetics group L'Oreal after her mother passed away in 2017, becoming the world's richest female billionaire. Photo: The National News

Not only does the $2.5 billion deal expand L'Oréal's presence in the high-end cosmetics market, it also provides financial support to the Brazilian company amid shrinking profit margins and mounting debt.

Aesop is Natura's most profitable brand with nearly 400 stores generating $537 million in revenue in 2022, up 21% from a year earlier.

In 2022, Aesop opened its first stores in China, the world’s top luxury market, and saw “unexpectedly strong performance.” The company also reported double-digit growth across all business regions last year.

Founded in 1987, Aesop has developed a wide range of premium skin, hair and body care products with natural ingredients.

From its first store opening in an underground car park on the outskirts of Melbourne in 2003, Aesop has gone global with dozens of locations across New York and London.

Aesop's chief customer officer Suzanne Santos (left) and Australia and New Zealand regional director Preet Bains at the company's store in Melbourne, Australia. Photo: Financial Review

Natura acquired a majority stake in Aesop in 2012 and took full ownership four years later. Aesop has continued to grow, outpacing other Natura brands such as Avon and The Body Shop.

However, the Brazilian cosmetics company has faced a tough time trying to expand globally due to the Covid-19 pandemic and the Russia-Ukraine conflict, leading to a budget deficit.

Therefore, Natura has considered selling part or all of Aesop to carry out a larger restructuring process, with the expectation of recovering the stock price and improving financial performance.

Natura said the company will focus on strategic priorities such as consolidating its Latin American operations, while optimizing the Avon International footprint and improving The Body Shop's business following the divestment of Aesop .

Nguyen Tuyet (According to Bloomberg, Reuters)

Source: https://www.nguoiduatin.vn/thuong-vu-ma-lon-nhat-cua-ga-khong-lo-my-pham-phap-loreal-a601359.html