Shiseido Co agreed to buy US-based Gurwitch Products from closely held Alticor, adding the Laura Mercier and ReVive brands as the more than 140-year-old Japan-based cosmetics maker seeks growth overseas in the luxury and anti-ageing products market.
The Japanese company’s American unit will lead the acquisition, which will be funded by existing cash and loan facilities, Shiseido said on Friday in a statement, without disclosing terms. The transaction is scheduled to close in the third quarter of 2016.
Shiseido’s investments in overseas growth may help it reach its target to increase sales to more than ¥1tn ($9.2bn) in 2020, compared with the ¥865bn average estimate for the year ending December 2016. The company is still contending with the costs of its $1.7bn purchase of US-based Bare Escentuals in 2010, and announced last month it will incur a one-time cost of about ¥5bn to relocate the unit to New York City from San Francisco.
“Gurwitch’s forte is colour cosmetics, so we think acquiring its brands will help enrich Shiseido’s US brand portfolio,” Mitsubishi UFJ Morgan Stanley Securities analyst Hisae Kawamoto wrote in a note.
Shiseido shares fell 0.1% to ¥2,863 by the close of trading in Tokyo, trimming its year to date gain to 13.2%. The benchmark Topix index rose 0.4%.
Gurwitch posted $175mn in sales for the fiscal year 2015, and the effect of the acquisition on Shiseido’s results this year is expected to be minor, according to the company’s statement.
“The combination is expected to provide Shiseido with significant growth opportunities, expanded customer reach and an even stronger foothold in the fast-growing prestige makeup market,” the company said in the statement.
Shiseido’s investments in overseas growth may help it reach its target to increase sales to more than ¥1tn ($9.2bn) in 2020, compared with the ¥865bn average estimate for the year ending December 2016.
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