The deal is expected to close in the first quarter of 2019. Once the deal is finalised, ELEMIS will become a wholly-owned subsidiary of the Group.
The Hong Kong-listed firm said the acquisition would be funded by the Group’s cash on hand and bank borrowings.
Building a strong premium portfolio
This acquisition is the company’s largest since its listing and is part of its strategy to build a strong portfolio of premium beauty brands.
“ELEMIS presents a truly unique opportunity that fits us perfectly in terms of brand ethos, product quality, management capability, as well as growth and profitability trajectory,” said Reinold Geiger, chairman and CEO of L’Occitane.
Additionally, the company said the deal would help it strengthen its omni-channel distribution and skin care portfolio, which it has been investing in substantially in recent years.
Geiger believes ELEMIS has enormous potential in untouched markets like Asia-Pacific, where L’Occitane has a strong presence. “We are confident ELEMIS will be immediately accretive to the Group’s results, in line with our aim to deliver sustainable value to our shareholders.”
Mutually beneficial agreement
On the other hand, ELEMIS said it plans to leverage on the Group’s geographical presence to expand into new markets.
The company added that ELEMIS will be led by its co-founders and members of the existing management team: CEO Sean Harrington, President Noella Gabriel; chief marketing officer Oriele Frank.
“We are thrilled to announce this agreement with L’Occitane, which will strengthen the continued growth and momentum behind our timeless brand and remarkably transformative products,” said Harrington.
He added: “L’Occitane’s philosophy resonates closely with our own, in creating quality products sourced from nature and developed through cutting-edge science and technology. Together with the Group’s entrepreneurial leadership, I am confident about realising our mission to grow ELEMIS into one of the leading skincare brands in the world.”
Good records in APAC
L'Occitane reported €1.3bn ($1.5bn) in net sales, growing 4.6% at constant exchange rates last fiscal year. Operating profit decreased by 16.2%, to €141m ($162m).
The firm sought to expand in Asia in 2010 and became the first French company to go public in Hong Kong, where it raised $708m on the Hong Kong stock exchange. Last year, L'Occitane entered the Hong Kong Hang Seng stock market indexes.
Its net sales for the six months ending September 2018 grew 12.4% at constant rates to €595.4m ($679m) driven by sales in China and Hong Kong as well as the launch of L’Occitane’s Immortelle Reset Serum.
