Magic Holdings acquisition will be L'Oreal's biggest move in China to date

L’Oréal is keen to reinforce its commitment and presence in the China market, following the announcement back in January of this year that it was pulling its Garnier brand there.

The company wants to stress that its latest move in China underlines and strengthens its leadership position in what is now the largest market for cosmetics in the world.

An important acquisition for the China business​

“This is the most important acquisition for L’Oréal since the acquisition of Yves Saint Laurent Beauté in 2008,” ​said Jean-Paul Agon, Chairman and CEO in an official statement.

“The MG brand beautifully completes the brand portfolio of our consumer products division in China: L’Oréal Paris, Maybelline New York and MG, the iconic Chinese brand. This acquisition marks the acceleration of our conquest of new consumers in China.”​

Magic Holdings produces facial beauty masks, a category that has proved to be particularly successful in the China market in recent years, having grown exponentially year-on-year.

Tapping into big growth in facial masks​

In the period 2012 – 2013, Magic Holdings reported that its sales grew by 25% compared to the period 2011 – 2012, to reach a total €160m, a performance underlined by the fact that the company’s MG brand is one of the leading masks in the category.

“We are delighted to join L’Oréal. We believe our brand will benefit from L’Oréal’s extensive science based expertise and its world-class management experience and know-how. This move will help to build the special value of the facial mask sector, continuously grow the sector and strengthen MG’s leadership,” ​said Yuyuan She, CEO Magic Holdings.

L’Oréal says that it intends to build on Magic’s existing management teams, while tapping into its own multi-billion dollar existing research and development facilities in both China and Worldwide to help expand the business.

The new business will now become a part of L’Oréal’s Consumer Products Division in the country, and is likely to be marketed under the L’Oréal Paris and Maybelline New York brand names.

L’Oréal still aiming to build on its position in China​

The French cosmetics giant says it wants to hold onto its position as both the biggest cosmetics player in the world, as well as the increasingly important market in China.

Although it pulled its Garnier brand, the company says that this move will serve to concentrate its business model on higher growth categories, which is expected to happen through the expansion of the Maybelline brand.

According to L’Oréal China, the business recorded sales of CNY13.28 billion (€1.55 billion) in 2013, an increase of 10.2% versus a year ago, marking the 13th consecutive year of double-digit growth for the business.