Coty Inc. is expected to disclose later tonight plans to acquire Tjoy, a Chinese skin care brand.
The deal calls for Coty to acquire a major stake in Tjoy Holdings, Ltd., a Cayman Islands based company. The move is intended to give Coty a foothold in China and the ability to expand its R&D capacities there.
This acquisition also caps a multi-billion dollar buying spree apparently meant to diversify Coty out of its dependence on the struggling fine fragrance market. Coty acquired OPI Products Inc., a salon-based nail enamel brand, for a price estimated at under $1 billion. It also bought the skin care brand Philosophy for a price thought to be similar. These moves followed the acquisition of Dr. Scheller Cosmetics, a German brand, from a Russian company, Kalina. In October, Coty also acquired the license to develop a color cosmetics line for Calvin Klein, which also does business with Coty in fragrances.
This sudden turn into treatment and makeup is understandable considering that Coty is heavily reliant on the celebrity and designer fragrance market, which dropped 10 percent in U.S. department and specialty stores in 2009 to $2.48 billion, according to NPD Group.
“The TJoy investment positions Coty as a major player in China, solidifying our position as a global beauty leader,” said Bernd Beetz, chief executive office of Coty Inc. Coty has been involved in China before, when it formed a joint venture under Beetz’s predecessor Peter Harf with the leading Chinese prestige brand, Yue-Sai Kan. Yue-Sai was subsequently sold to market leader L’Oreal.