Beauty Beat: Clarins and L’Occitane Eye Acquisitions
Groupe Clarins is looking to make acquisitions, both on its own and through a venture with L'Occitane, Clarins executives said at the company's annual results presentation for financial analysts on Friday.
PARIS — Groupe Clarins is looking to make acquisitions, both on its own and through a venture with L'Occitane, Clarins executives said at the company's annual results presentation for financial analysts on Friday.
As reported, Clarins — which has held a stake in L'Occitane since 2001 — this February increased its shareholding in the natural beauty manufacturer and retailer to 23 percent from 10 percent. Clarins plans to sell part of its stake to a newly created L'Occitane holding company for a cash payment of 132.2 million euros, or $174.8 million at current exchange. Under terms of the pending deal, Clarins would retain 10.05 percent of the holding company, which is worth around 800 million euros, or about $1 billion, and whose other shareholders will include L'Occitane's management.
In another agreement, Clarins and L'Occitane have created a joint venture company through which they plan to make acquisitions and further investigate alternative distribution channels to selective retailing. Clarins secretary general Pierre Milet said the joint venture is to be split evenly between the firms and will have around 500 million euros, or $661 million, at its disposal.
L'Occitane sales for the year ended March 31, 2006, grew 19 percent to 259.3 million euros, or $332.1 million at average exchange, and its net profits have tripled during the last three years.
As reported, Clarins' net sales declined 3.1 percent to 967.2 million euros, or $1.22 billion, at average exchange rates, in 2006 versus 2005. Its net profits increased 130.8 percent to 223.3 million euros, or $279 million, thanks to the financial transaction involving its stake in L'Occitane.
Christian Courtin, Clarins' president and chief executive officer, called his company's performance "good. We just missed the sales growth target of 6 percent, but at 5.5 percent [on a like-for-like basis], we rose twice as fast as worldwide growth of 2.7 percent."
Given Clarins' yearly turnout, Milet said the company can independently spend as much as 600 million euros, or $793 million at current exchange, on acquisitions. "There are several opportunities that interest us," said Courtin, who added the firm has not yet made any offers.
Clarins has decided to tackle e-commerce on its own after having launched gloss.com, a portal owned with Chanel and the Estée Lauder Cos., in 1999. Together, the companies decided to shut down the portal. Clarins will launch its own e-commerce site at the end of April, first in France and then in the U.S. and U.K. Courtin said e-tail sites such as sephora.com have shown Clarins' Internet sales potential."It also allows us to get to know our customers better," he added.
On the product front this year, Clarins is in the process of relaunching its makeup line with new packaging and textures, to attract a younger clientele. The company is also investing almost 16 million euros, or $21 million, in new merchandising units for makeup.
Upcoming launches from Clarins' star Thierry Mugler and Azzaro fragrance brands include Thierry Mugler Eau de Star and Ice Men, plus a masterbrand, called Now, from Azzaro. In 2008, Clarins will bring out its first scents under license with Porsche Design and with David Yurman.
"Competition has increased dramatically," said Courtin, who noted 693 fragrances were introduced worldwide in 2006, compared with 545 in 2005, citing statistics from fragrancesoftheworld.com, an online fragrance reference.
"Skin care remains our forte," he said, adding Clarins is the number-one women's skin care brand worldwide and Clarins Men is number two in its category. Clarins is to bow a Stretch Mark Control cream and reformulate White Plus HP whitening products.
When it comes to distribution, Clarins is slated to further add to its own retail network, which includes 26 wholly owned institutes, 14 franchised institutes, plus 11 spas in luxury hotels. Further, Clarins boutique openings are planned in China, Tokyo and Paris, said Courtin.
At the end of 2007, Clarins' Mugler plans another exclusive fragrance to be sold at Victoria's Secret. This follows a similar tie-in for Innocent Secret, a scent launched in 2006 that generated retail sales of $1 million.
Courtin expects Clarins will grow its business by 6 percent — or double the projected worldwide beauty sales turnover — in 2007 over 2006.
Clarins stock closed up 1.09 percent to 56.81 euros, or $75.13, on the Paris Bourse Friday. — Ellen Groves
Shareholders OK CVS, Caremark Deal NEW YORK — Shareholders of CVS Corp. and pharmacy benefits manager Caremark Rx Inc. have voted in favor of the firms' proposed merger, a deal worth roughly $24 billion that CVS expects to close this week.CVS shareholders approved the merger on Thursday and Caremark shareholders gave the deal the thumbs up on Friday.
The merger calls for Caremark shareholders to receive 1.67 shares of CVS stock for each share of Caremark stock, an offer that has remained unchanged despite a hostile takeover bid by Express Scripts Rx, another pharmacy benefits manager. Express Scripts made a cash-and-stock offer in mid-December that was worth about $25 billion.
CVS, however, then sweetened its offer for Caremark, offering a special $7.50-per-share dividend to be paid to Caremark shareholders once the merger is finalized.
The new company is to be called CVS/Caremark.
"We are gratified that Caremark shareholders have recognized the compelling strategic and financial benefits of this groundbreaking merger," said Mac Crawford, chairman, chief executive officer and president of Caremark in a statement Friday. "Caremark and CVS now have an historic opportunity to define and lead the continuing evolution of the pharmaceutical services industry."
Tom Ryan, chairman, president and ceo of CVS, said in a separate statement on Friday, "Today's vote reinforces the compelling logic underpinning the merger of the nation's largest pharmacy chain with the leading pharmacy services company and speaks to the tremendous opportunity we have before us."
In response to Caremark shareholder approval of the merger with CVS, Express Scripts issued a statement Friday thanking shareholders of Caremark for their "consideration" during its takeover attempt.
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