PARIS — L’Oréal hit the acquisition trail again, snapping up French baby care maker Cadum on Thursday. The company was majority-owned by investment fund Milestone Capital.
This story first appeared in the April 27, 2012 issue of WWD. Subscribe Today.
Terms of the deal were not disclosed, but according to industry reports the purchase price was 200 million euros, or $264.5 million at current exchange.
“Cadum is an important acquisition for L’Oréal in France,” said Hervé Navellou, general manager of the company’s France-based Consumer Products Division. “Cadum is a hundred-year-old brand that enjoys a great reputation, is growing rapidly and has interesting development perspectives. It blends seamlessly into our strategy to conquer new consumers in France.”
“It is a good iconic brand to complement the French business,” said Eva Quiroga, an analyst at UBS.
In 2011, Cadum’s consolidated sales were 58 million euros, or $80.8 million at average exchange for the period. Of that, 49 million euros, or $68.2 million, stemmed from its domestic market, according to L’Oréal.
Cadum, billed to be France’s oldest soap and baby product brand, was established in 1907. In 1952, it was acquired by Colgate-Palmolive, which then sold the company to two entrepreneurs in 2003. Milestone worked with Cadum’s management team, starting in 2006, and then one year later it purchased the brand. Also in 2007, Milestone brought together a new management team for Cadum.
Cadum achieved its budgets yearly between 2007 and 2009, according to Milestone’s Web site.
“By 2011, Cadum will have doubled its EBITDA (earnings before interest, taxes, depreciation and amortization) whilst tripling its annual marketing and advertising budget,” the site says.
Cadum is to join the L’Oréal Consumer Products Division in France.
Compared with many of L’Oréal’s prior acquisitions, the Cadum purchase is small. “It is really small, less than half a percent of sales, so it does not move the needle at all,” said Quiroga. In the recent past, the French beauty giant has made numerous acquisitions of brands such as Clarisonic, Essie and some U.S. salon distributors. “This one [feels] close to home from a regional and category point of view, allowing them to consolidate existing positions,” added Quiroga. When asked, Quiroga said she doesn’t think that L’Oréal needs to make acquisitions today anymore so than in the past.
“Yes, they have a very comfortable balance sheet and there is still the stake in Sanofi, but there is also the outstanding question of Nestlé’s intentions over the longer term,” said Quiroga. “[L’Oréal has] been good at buying underutilized brands and growing them through category and regional expansion, often many-fold — for example, Kiehl’s, La Roche-Posay and Maybelline — and I expect them to do more along those lines. Remember, 25 out of the 27 brands L’Oréal has have been acquired.”