L’Oreal (NYSE:LRLCY) has recently closed a deal to acquire the popular French sensitive skin care company Cadum. The details of the financial transaction have not been disclosed yet, but reports suggest L’Oreal is likely to have paid €200 million for the acquisition. The acquisition is a part of the company’s ongoing efforts to reinforce its position globally, as it competes with behemoth Procter & Gamble (NYSE:PG) and niche players such as Estée Lauder (NYSE:EL) and Revlon (NYSE:REV).
L’Oreal has bought Cadum from the London-based investment fund Milestone Capital, which acquired Cadum in 2007 in a leveraged buyout. Cadum generated sales close to €58 million last year with operating margin in excess of 20% and will now become a part of L’Oreal France’s consumer products segment. Cadum owns popular brands in sensitive skin care including children skin care. It also launched organic and intimate hygiene products range in 2009. Cadum currently generates 85% of its sales within France. Post acquisition, L’Oreal can easily expand its popular sensitive skin care products to other European markets.
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Skin care makes up makes up 25% of L’Oréal’s value according to Trefis and is the largest and fastest growing segment in the beauty and personal care industry. Last year, L’Oreal USA bought Pacific Bioscience Laboratories, a Washington-based developer of Clarisonic skin-care devices, which clean skin with oscillating brushes. Trefis expects the skin care business to grow at around 5% year-over-year over the forecast horizon.