Coty puts $239m bid in for Chanel’s Bourjois cosmetics brand

The transaction should see Coty acquire Bourjois in exchange for 15 million Class A Coty shares, which has a current market value of $239.1m, a deal Chanel says it has entered into exclusive negotiations in order to close it.

Currently Bourjois’ portfolio includes a comprehensive range of luxury colour cosmetic products that are sold in prestigious retail channels in 50 countries worldwide, particularly in Western Europe, the Middle East and Asia-Pacific.

A brand with a long heritage and a killer lipstick​

The brand was founded in 1863 by French actor Joseph-Albert Ponsin, who originally developed the line for his fellow actors.

During the 1920s, the Bourjois brand was adapted to the growing sense of independence and liberation that European women were experiencing a the time, and has since been developed into a multi-million Euro business that showcases perfumes, gift boxes and a full range of colour cosmetic products.

In more recent years, the company has been propelled by its Rouge Edition Velvet Lipstick, which has become a must-have for many women shopping in the premium retail channels.

Bourjois is the right fit for Coty​

“Bourjois’ brands are highly complementary to Coty’s existing color cosmetics portfolio,”​ said Bart Brecht, chairman and interim CEO of Coty.

“Additionally, the company’s strong heritage, quality image and leadership positions in a number of Western European countries where Coty is seeking to bolster its presence, provide a great opportunity for Coty to further strengthen its leadership position in the large and growing color cosmetics category.”​

In a statement Chanel said it would be examining the offer in details, and will ‘enter constructive talks with Coty’.

If the talks prove successful, the next step would be to secure the customary closing conditions, which would include regulatory clearances.

Coty restructures​

Back in July of this year, Coty announced that it had restructured its organization to provide better focus on the market segments it serves, optimize its global markets presence, and to build on the brands in its portfolio.

The restructure will see the company’s stand-alone Prestige and Beauty divisions changed to a more integrated model built around categories and regions while maintaining prestige and mass differentiation.

The new divisions created will focus on the US manufacturer’s key segments – skin care, colour cosmetics, fragrance, and body care – R&D, marketing, and digital under the Categories and Innovations title.

The acquisition of the Bourjois brand would be a strong addition to the portfolio and would serve to prop up recently announced full year results that showed net revenue fell by 2.1% to $4.55bn, while profits slipped 2% to $316.2m in 2014.