Johnson & Johnson is going even bigger in Japan.
The consumer products giant plans to spend 230 billion yen, or $2.1 billion, in a stock tender offer to take full control of Ci:z Holdings Co., including the Dr.Ci:Labo, Labo Labo and Genomer line of skin-care products.
The deal marks an extension of J&J’s 2016 strategic collaboration with the company, under which the New Jersey-based consumer group took a 19.9 percent stake in Ci:z and agreed to distribute its brands outside of Japan.
The transaction also underscores interest from strategic buyers in the professional skin-care space. In January, Colgate-Palmolive entered beauty with acquisitions of two brands sold through the spa and dermatologist channel: PCA Skin and EltaMD. And in 2017, L’Oréal spent $1.3 billion to add three brands to its Active Cosmetics division.
For J&J, the deal builds the business outside of the mass market. The company owns Aveeno, Clean & Clear and Neutrogena and other brands.
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J&J now plans to take control of all of Ci:z’s stock in the tender offer set to launch Monday and pay 5,900 yen a share. That’s a 55 percent premium over the stock’s last close of 3,800 yen on the Tokyo Stock Exchange.
“Health and beauty consumers are actively seeking science-based innovation to improve their skin,” said Jorge Mesquita, worldwide chairman of Johnson & Johnson Consumer. “This transaction will maximize value creation for Johnson & Johnson’s consumer business by bringing in an agile innovation model and rapidly accelerating sales through our global commercialization expertise.”
In addition to strengthening its presence in Japan, J&J said the deal would “more broadly bolster its offering in science-based, efficacious dermocosmetic brands” and act as a “springboard” to build its connected commerce capabilities by tapping into “one of the largest customer relationship management databases for direct-to-consumer skin care in Japan.”
Skin care is one of the hottest categories in the already red-hot beauty market, which has seen strategic acquirers and investors of all stripes scrambling to build and strengthen their presences in the area, particularly in the influential and quickly growing Asian market.
Shares of J&J slipped 0.4 percent to $138.18 in midday trading in New York Tuesday.
J&J is a very active dealmaker on several fronts and has been taking advantage of an m&a market on the move. (For instance, the company has made 26 deals in the medical devices area this year, including five acquisitions and 10 equity investments.)
The firm has the money to spend to remake its business and chase promising areas, like skin care in Asia. J&J’s sales tallied $81 billion for the past four quarters and it has more than $18 billion in cash on hand, according to S&P Capital IQ.