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CVC Purchasing Shiseido Personal Care Unit for $1.5 Billion

The Japanese beauty giant aims to be the world’s largest prestige beauty seller by 2030.

PARIS — To help reach its goal of becoming the world’s premier prestige beauty company by 2030, Shiseido is selling its personal care business to CVC Capital Partners in a $1.5 billion deal.

“The purpose of this transfer is to grow the personal care business, whose business structure is mass market and quite different from the cosmetics business with beauty consultant counseling, by spinning off and establishing a new joint venture independent of Shiseido,” said Masahiko Uotani, Shiseido president and chief executive officer, in a statement.

Shiseido’s personal care business, valued at 160 billion yen and including brands such as Tsubaki, Senka, Uno and Sea Breeze, is to be transferred on July 1 from the group in Japan and its wholly owned subsidiaries. Then a new company will be set up, the shares of which will be shifted to the Oriental Beauty Holding Co. Ltd. that will be financed by funds advised by CVC.

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A joint venture will be established, and Shiseido, with a 35 percent stake, is to act as a shareholder of the company that will operate the personal care business.

CVC is to run that company, which could go public.

As previously reported, on Jan. 25, Shiseido said it was in discussions with CVC Asia Pacific Ltd. about the transfer of its personal care business, which registers yearly sales of about 100 billion yen and is primarily operated in Asia.

That activity, also counting brands such as Super Mild, Ag DEO24 and Fino, mostly targets the mass market.

Shiseido, hard hit by the global pandemic, posted a net loss for the first nine months of its fiscal year, as well as double-digit declines in sales and operating profit.

The group registered a net loss of 13.67 billion yen for the nine months ended Sept. 30. This was in contrast to a net profit of 72.46 billion yen in the same prior-year period. Shiseido said it was due to lower sales, as well as extraordinary losses related to COVID-19, such as compensation of employees on leave and maintenance costs for stores and production facilities.

The company’s operating profit for the period plummeted by 91.4 percent to 8.9 billion yen, which it said was despite efforts to reduce costs in response to the rapid deterioration and market conditions.

Meanwhile, Shiseido’s net sales dropped 22.8 percent on the year, totaling 653.68 billion yen.

Earlier this week, the company raised its full-year 2020 guidance, saying it should register an operating profit. The group will publish full-year earnings on Feb. 9.

Shiseido has been bulking up its prestige portfolio that includes brands such as Clé de Peau Beauté, Nars and its eponymous Shiseido label.

In fall 2019, the group acquired the Drunk Elephant clean beauty brand for $845 million.

It’s reported that non-core beauty brands of other multinationals are currently in play, including at Unilever, which according to Bloomberg is planning to sell a grouping of assets in the U.S. and Europe. Unilever is said to be working with Credit Suisse Group AG on the spinoff.

For more, see:

Shiseido in Talks With CVC to Sell Personal Care Business

Shiseido’s Elusive Luxury Brand, The Ginza, Eyes China Expansion

The Beauty Carousel: Moves at Shiseido, La Prairie, Colorproof