East is looking West.
This story first appeared in the June 1, 2011 issue of WWD. Subscribe Today.
Pola Orbis, the fourth largest Japanese cosmetics firm, has announced its intent to acquire H20 Plus LLC, the Chicago-based, privately held skin care manufacturer with estimated retail sales of more than $100 million last year. The sale, if approved, would mark Pola Orbis’ first acquisition since its inception in 1929. H20 Plus is majority-owned by investment companies Cordova, Smart & Williams LLC and New MainStream Capital LLC, as well as Robert Seidl, the firm’s president and chief executive officer, and other members of senior management.
Seidl said in an exclusive interview with WWD that H20 Plus will continue to operate as an independent subsidiary, without the customary “overseer,” someone who is typically installed between a new company and a Japanese parent company.
“Not having that shows that we are retaining our autonomy,” said Seidl, who prior to joining H20 Plus in 2006 oversaw Zotos, a division of Shiseido.
Seidl added that all management is staying in its “current capacities” including Bill Colli, senior vice president of sales and marketing, with Seidl reporting to Satoshi Suzuki, president and chief executive officer, of Pola Orbis. “It will be management reporting in at an arms length [type] relationship.”
Pola Orbis, based in Tokyo, has operated as a private company for more than 80 years. It became public in December 2010. Because H20 Plus is its first acquisition, it would seem the company has had its eye on the marine-based skin care company for awhile.
“It would appear that way,” Seidl remarked.
Pola Orbis’ $2 billion in annual sales is predominantly generated through skin care sales via direct to consumer distribution through a sales organization of 130,000 women, as well as through about 500 retail stores. It ranks in size in Japan only after Shiseido, Kao and Kanebo.
While Pola Orbis will certainly contribute to helping H20 Plus in its international distribution — the first of which will likely be an entry into Japan — H20 Plus also stands to help Pola Orbis’ distribution outside of Japan. The company said that it aims to accelerate its growth in global markets and achieve by 2020 consolidated sales of $3 billion, an operating margin of between 13 and 15 percent and overseas sales that comprise 20 percent of overall sales.
“They are certainly successful by themselves but they don’t have a large footprint outside of Japan,” Seidl said. “But given our footprint in North America and other regions, we will be aligned not just on H20 Plus but also guidance and assistance to take Pola throughout the world.”
Seidl added that Pola Orbis is on board for all of the firm’s preannounced plans, including increasing doors, closing stores, building flagships and refreshing packaging for 2012, as well as launching a luxury line for the fourth quarter. H20 Plus is carried in 2,000 prestige retail points of distribution in 22 countries, with its largest market being North America.
One investment banker said H2O Plus has been a “little distressed” over the past several years, due to the economy, and that it likely was sold for less than one times sales, or about $100 million.