Why Did L’Oreal Decide To Acquire Three Active Cosmetics Brands From Valeant For $1.3 Billion?
L’Oreal is one of the leading names in the active cosmetics market, a segment that happens to be the fastest growing for the company (8% like-for-like y-o-y growth in 2015). In an effort to further grow its active cosmetics segment, L’Oreal has announced its intention to acquire the skincare brands, CeraVe, AcneFree and Ambi from Valeant Pharmaceuticals for a sum of $1.3 billion. According to Frédéric Rozé, President and CEO of L’Oréal USA, the brands will be suitable additions to L’Oreal’s portfolio that currently contains names such as La-Roche Posay, Vichy, and Skinceuticals. The brands to be acquired are quite popular with health professionals and are expected to almost double the revenue for its active cosmetics division in the U.S.
The brands are also expected to strengthen the company’s ties with health professionals who are a key towards developing products in the active cosmetics market. L’Oreal’s market position in North America, the fastest growing geography for active cosmetics, is expected to grow further due to the acquisitions. L’Oreal’s influence in other geographies, by virtue of being the global cosmetics leader, gives it the opportunity to expand the footprints of the acquired brands beyond North America.
Founded in 2005, CeraVe is known for its advanced skincare products such as cleansers, moisturizers, healing ointments, sunscreens, and baby products. Touted as one of the fastest growing companies in North America, the company demonstrated an average of 20% growth rate over the last couple of years. AcneFree is known for its over the counter cleansers and acne treatment products in the U.S. while Ambi distributes products that addresses the needs of multicultural consumers. The annualized revenues of the three brands combined is estimated to be around $168 million.
- Is There More Room For Growth In L’Oreal Stock?
- After Underperforming The Markets, Can L’Oreal Stock Rally?
- L’Oreal Stock Poised For Bounce Back After Rough Month?
- After Dismal Performance Last Month, L’Oreal Stock Looks Set To Rebound
- L’Oreal Stock Looks Set For A Rally On The Back Of Strong Earnings Growth
- Forecast Of The Day: L’Oreal Makeup Revenues
The global beauty and personal care industry is expected to double its current size over the next decade to decade and a half. The cosmeceutical or active cosmetics market will reap the benefits of this growth since it is one of the most rapidly growing segments in the beauty and personal care market. According to a recent report by Research and Markets, the global cosmeceutical market is expected to grow at a CAGR of nearly 6% between the period of 2017 to 2021. The biggest markets are expected to be the US, China, Brazil, Japan, and India. L’Oreal’s acquisition will help it in further growing its active cosmetics business and thus increase its market share in segments such as skincare.
Editor’s Note: We care deeply about your inputs, and want to ensure our content is increasingly more useful to you. Please let us know what/why you liked or disliked in this article, and importantly, alternative analyses you want to see. Drop us a line at content@trefis.com
Have more questions on L’Oreal? See the links below.
- What Is L’Oreal’s Fundamental Value On The Basis Of Its Forecasted 2015 Results?
- How Has L’Oreal’s Revenue And EBITDA Composition Changed Over 2012-2016E?
- L’Oreal: Year 2015 In Review
- What Is L’Oreal’s Fundamental Value Based On 2016 Estimated Numbers?
- L’Oreal’s Q1 2016 Earnings Results
- How Did The Top Two Beauty Companies Perform In The Fragrance Segment Over The Last Five Years?
- How Can L’Oreal’s Digital Investments Help The Company?
- Who Relies More On Debt: L’Oreal Or Estee Lauder?
- What Are Some Of The Trends Expected To Drive The Future Of The Beauty Market?
- Why Might L’Oréal Be Acquiring Luxury Perfume Brand Atelier Cologne?
- How Is L’Oreal’s Revenue Composition Expected To Trend?
- How Is L’Oreal’s Skincare Business Expected To Trend?
- Why Does L’Oreal Want To Acquire The Skincare Brand, Société des Thermes de Saint-Gervais-les-Bains?
- Here’s Why L’Oreal’s Digital Progress Places It Way Ahead Of Its Peers
- How L’Oreal Stands To Gain From The Growth Of The Global Hair Care Market
- Here’s How L’Oreal Is Gaining Competitive Advantage With Its ‘Beauty Squad’
- L’Oreal Makes Haircare Go Digital With Its Latest Launch
Notes: