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Shiseido in Talks With CVC to Sell Personal Care Business

Japan’s largest beauty company said the deal could take place around the first half of 2021.

PARIS — Shiseido said that it is in discussions with CVC Asia Pacific Ltd. about the transfer of its personal care business, which is primarily operated in Asia.

Japan’s largest beauty company said in a statement Friday the deal could take place around the first half of 2021, and that the business would then be managed jointly.

“However, no formal decisions have been made as of yet,” said Shiseido in the statement.

“The company has been promoting its Prestige First Strategy and will continue to strengthen efforts in this core business with the aim of becoming a ‘premium skin beauty company’ utilizing digital technology and centered on the prestige/premium beauty area,” the company continued. “We aim to be the world’s number-one company in this area by 2030. “

Shiseido said its personal care business, with widely known brands such as Tsubaki, Senka, Uno and Aquair, mostly targets the mass market.

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“However, in order to maximize the potential of the business and further grow the brands in this competitive market, we need to make concentrated investments in product development and advertising, and in order to build the new business model that makes this possible, we are investigating various cases,” it said, acknowledging a scenario with CVC is included.

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Shiseido published the statement after Bloomberg reported Thursday about the beauty company’s imminent deal with CVC. Bloomberg said Shiseido’s personal care business could sell for 150 billion yen to 200 billion yen, or $1.45 billion to $1.9 billion.

Shiseido’s shares closed up 4.4 percent on Friday to 7,075 yen.

As previously reported, the company, hard hit by the global pandemic, posted 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.

The company 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.

CVC Capital Partners’ current beauty investments include Douglas and PDC Brands.

For more, see:

Birkenstock On the Block, CVC and Permira Circling: Sources

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

Shiseido Posts Nine-Month Net Loss Due to COVID-19, Lowers Guidance