Beauty lab Knowlton Development Corp. — better known as KDC/One — and HCT Group are merging.
The goal is to create a one-stop shop for the beauty industry, complete with innovative formulations and a full spectrum of packaging and other services.
KDC provides a range of services to beauty companies, including custom product formulations, and has bought up several other beauty manufacturers over the past few years. HCT also provides cosmetic manufacturing services, including packaging, filling and logistics.
KDC, founded in 2002, has been backed by private equity firm Cornell Capital since 2018. The business has been building itself up through acquisitions, including Benchmark Cosmetic Laboratories Inc., acquired in November, and Swallowfield in the U.K., in July. HCT, headquartered in Santa Monica, Calif., and founded in 1992, has been focused on organic growth, and works with more than 400 customers globally.
“This transformative transaction will enhance how we serve beauty and personal-care brands around the world,” said Nicolas Whitley, president and chief executive officer of KDC, in a statement. “Our vertically integrated platform will offer the industry a true one-stop solution. With the support of our partners at Cornell Capital, as well as CDPQ, IQ and HarbourVest, we have been able to build our reputation as a top-tier innovator for an expanded base of customers. HCT’s cutting-edge designs, engineering, manufacturing and global reach will enable us to further elevate our product and service offerings to better serve and anticipate the evolving needs of our valued customers.”
“KDC/One and HCT have highly complementary business models and together will offer a unique solution to our world-class client base,” said Tim Thorpe, president and ceo of HCT, in a statement. “The transaction will enable us to leverage adjacent customer relationships, geographic footprints and products.”
Whitley and Thorpe will both remain in their respective roles as ceo of each business.
Terms of the deal were not disclosed, but Cornell Capital and other existing investors, as well as HCT management, will reinvest in the business. UBS Securities LLC and Jefferies are acting as joint lead arrangers for the transaction. The deal is expected to close in early 2020.
Jefferies advised KDC and Cornell on the deal, and Houlihan Lokey advised HCT.
The merger of KDC and HCT is one of several beauty manufacturing deals recently. Earlier this week, International Flavors and Fragrances Inc. agreed to a $26 billion merger with DuPont’s Nutritional and Biosciences division. In August, Elkem ASA agreed to buy Basel Chemie for about $27 million.
The segment is expected to continue to attract M&A and private equity investment interest in 2020.
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