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M&A activity hints at new realities in the beauty sector

By Deanna Utroske contact

- Last updated on GMT

Related tags: Mergers and acquisitions, Euromonitor international, Private equity, The estée lauder companies, Coty, k beauty

This past week Coty bought controlling stake in Kylie Cosmetics, The Estée Lauder Companies acquired Korea-based skin care brand Dr Jart+, and Olaplex accepted a private equity deal from Advent International. To get a sense of what these transactions mean for industry, Cosmetics Design checked in with Kayla Villena, Senior Analyst of Beauty and Fashion at Euromonitor International.

“There have been a lot of reports of a slowdown in beauty in North America….With the [week’s] M&A activity, one might think that that’s not necessarily true. But what I think is interesting," ​says Villena in her interview with Cosmetics Design editor Deanna Utroske this past Friday in Chicago, Illinois, "is that the M&A activity [we see going forward] may not necessarily amount to a total takeover; the activity might shift to look more like a minority or majority acquisition.”

Kylie Jenner sells majority stake in Kylie Cosmetics to Coty

Kylie Jenner sold 51% of her Kylie Cosmetics business to Coty for $600m at the start of last week. The deal has (not surprisingly made) headlines in not only the beauty industry but also in widely read business and financial publications as well as in the mainstream media. The fact that Jenner opted to sell only a fraction of her business, but that that fraction amounts to controlling stake in Kylie Cosmetics, is telling in the current global economy and in the beauty M&A space more specifically.

For Coty, Villena says, the Kylie Cosmetics deal is about “resetting their portfolio, looking at areas that have high growth and high-growth potential and then investing in those spaces.”

The Estée Lauder Companies buy into K Beauty with Dr Jart+ acquisition

K Beauty continues to be a strong concept globally. For instance, this year LG Household & Health launched their K Beauty brand VDL Cosmetics in North America​, and Mediheal launched here in the US market​.

Beyond this growth, more and more legacy beauty makers around the world are building and buying Korean beauty brands. In May of 2018, L’Oréal acquired the K Beauty color cosmetics brand Stylenanda​; and late that same year, Avon launched a K Beauty collection​.

Now, The Estée Lauder Companies have bought into K Beauty with the acquisition of Dr Jart+. As Villena points out, The Estée Lauder Companies have had a stake in the Dr Jart+ brand since 2015. And “the acquisition is quite important because it speaks to two things,” ​she say, “number one, the strength of K Beauty as a global beauty concept…and to the strength of the Asia Pacific region in general.”

Advent International acquired Olaplex

With its patented and highly sought-after hair repair technology, Olaplex has been a brand of interest to investors and beauty makers for some time. Last Tuesday, as Cosmetics Design reported, Advent International announced a deal to acquire the Olaplex business and grow it to its full global potential.

“With Advent’s shared vision and deep experience in supporting high-growth businesses, we look forward to enhancing our company’s strong customer loyalty globally and across channels and realizing our ambitious growth plan,” ​said Dean Christal co-founder of Olpalex, in a media release about the deal.

Advent International, the global private equity firm that acquired the brand, has only one other beauty business in its portfolio. But still, the acquisition is not an unusual one, Villena tells Cosmetics Design, adding that “beauty is a fast-growing industry, [and] even though it’s set to decelerate a little bit, there are pockets of growth. And I know hair care is one of them.”

Watch the full Cosmetics Design video interview at the top of the page to learn more about this recent spate of beauty M&A activity.

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DeannaUtroske_Editor_CosmeticsDesign

Deanna Utroske, CosmeticsDesign.com Editor, covers beauty business news in the Americas region and publishes the weekly Indie Beauty Profile column, showcasing the inspiring work of entrepreneurs and innovative brands.

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