After closing out a record year in 2016 with over 100 beauty care M&A deals, 2017 is already off to a fantastic start with acquisitions from both strategic buyers and consumer-focused private equity groups.
L’Oréal signs with Valeant
Following a year we deemed the “Year of the Strategic Buyer,” corporate buyers continue to make their mark on beauty care M&A. L’Oréal signed a definitive agreement with Valeant to acquire skin care brands CeraVe, AcneFree and Ambi for $1.3 billion, representing a 7.7x multiple of revenue. Each of the three brands are built on strong relationships with health professionals and widely distributed across the drug, mass, specialty and eCommerce channels. The acquisition will add $168 million of combined revenue and significantly increase the size of L’Oréal’s Active Cosmetics Division in the U.S., which currently includes brands such as La Roche-Posay, Vichy and SkinCeuticals.
Coty takes majority stake in Younique
Shortly thereafter, Coty announced an acquisition of a majority stake in Younique, a social media-driven direct sales cosmetics company that sells beauty care products through 200,000 “presenters”. The Younique model utilizes peer-to-peer social selling similar to Avon or Tupperware, except that most of Younique’s sales are online. The company generated approximately $400 million of revenue in 2016 with over 4.1 million consumers. Coty agreed to acquire 60% of Younique for $600 million in cash, leaving the remaining 40% to the founders who will continue to run the business. The acquisition values Younique at $1 billion, representing a 2.5x revenue multiple.
Private equity groups make imprint on beauty M&A landscape
Not to be outdone, private equity groups have also made an early imprint on the beauty care M&A landscape in 2017. Main Post Partners kicked off the year with a minority growth investment in Milk Makeup, the award winning color cosmetics line from the co-founders of Milk Studios. Founded in 2016, the indie makeup brand offers color cosmetics, skin care and hair care products available online and through brick-and-mortar retailers such as Sephora and Urban Outfitters. The investment will support the geographic expansion of the brand both within the U.S. as well as internationally with plans to quadruple its door count in 2017.
In other private equity news, L Catterton made a growth capital investment in Kopari Beauty, a premium, coconut oil-based natural beauty brand. Founded in 2015, the company currently sells primarily online. The investment will allow the brand to continue its growth throughout the U.S., expand into international markets, drive continued product innovation and support recently launched initiatives in new channels including QVC and Sephora.