Olaplex has hired Financo to explore deal options, according to industry sources.
The business does about $100 million in sales, and is looking for an investor, sources said. The process is said to be primarily focused on private equity firms.
Olaplex was the first to bring bond-building products, which aim to repair damaged hair, to the market. Since Olaplex launched in 2014, many companies have launched copycat bond builders.
In 2018, Olaplex won a lawsuit against L’Oréal in the U.K., alleging that its L’Oréal Professionnel Smartbond product infringed on an Olaplex patent. Before the L’Oréal product was launched, the two had been in deal talks, court proceedings revealed. L’Oréal appealed the court’s decision, and that decision is expected at the end of 2019 or early 2020.
Olaplex products are credited with strengthening hair enough to bleach it to extremes — before, hair would simply break off. The business is sold primarily in the professional channel, but is said to be growing quickly on the consumer side, and sells some products through Sephora.
In August, The NPD Group beauty industry analyst Jennifer Famiano said Olaplex “though still in its infancy, is the third fastest growing brand in overall hair care when ranking on incremental dollar gain.” The business also ranks high in Tribe Dynamics’ earned media value reports.
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Industry sources, looking at comparable transactions, said similar companies have traded anywhere from five times to 12 times sales, which on the high end could mean a deal valued at more than $1 billion for Olaplex.
Hair has been the hottest category in prestige beauty lately, at least in the U.S., where it has been growing far faster than skin care and makeup, according to numbers from The NPD Group. For the 12-month period ended in January, hair was up 23 percent to $724.2 million, according to NPD.
Hair companies have also proven to be attractive M&A targets. In 2016, the Carlyle Group sold OGX to Johnson & Johnson for $3.3 billion and Unilever bought Living Proof. In 2017, Kao was said to pay more than $400 million to buy Oribe.
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