COSMAIR TO EXPAND ETHNIC BASE
Byline: Julie Naughton
NEW YORK — Cosmair is proving its commitment to the ethnic beauty market.
With its purchase of Carson Inc., the Savannah, Ga.-based ethnic products manufacturer, Cosmair will now own two of the top companies in the category: Carson and Soft Sheen, which was acquired in 1998.
As reported, Cosmair — the U.S. subsidiary of French beauty giant L’Oreal SA — announced Monday that it has signed a definitive agreement to buy Carson. The agreement provides for a cash tender offer to begin in about a week, in which Cosmair would acquire all outstanding shares of Carson’s common stock at about $5.20 net per share. Industry sources estimated that the deal would amount to about $250 million.
If the offer is successfully completed, Carson will become a wholly owned subsidiary of Cosmair.
Carson’s sales topped $176 million in 1999, reportedly a 38 percent leap over 1998 numbers. Its hair- and skin-care products are sold in mass-market retailers and through beauty and barber supply stores in the U.S. and in more than 60 countries around the world and include the brands Dark & Lovely, Gentle Treatment and Magic Shave.
“We believe this transaction to be in the best interests of Carson, its shareholders, its customers and its employees,” said Malcolm Yesner, Carson’s chief executive officer, and Roy Keith, Carson’s chairman, in a joint statement. “L’Oreal is an outstanding company in the worldwide personal care market, and while Carson has continued to make impressive progress, it will have an even greater opportunity to achieve its potential than otherwise, given the increasingly highly competitive and changing nature of the global personal care market.”
Cosmair already owns Soft Sheen, which did an estimated $100 million in the mass and professional arenas in 1999.
Cosmair has been steadily building its ethnic base for several years, even before purchasing Soft Sheen. For instance, Redken — which Cosmair acquired in June 1993 — teamed up with Soft Sheen that year to develop Mizani, a line of salon-only permanent and semipermanent hair colors for African-American and Hispanic consumers.
“Our work in ethnic hair care with Soft Sheen has been a very positive experience and encouraged us to continue our investment in this market,” said Guy Peyrelongue, president and ceo of Cosmair, in a statement. “Cosmair believes in the ethnic hair care market and is committed to the African-American customer. Carson will be a fine complement to our company and its existing portfolio.”
In the recent past, Carson has also been committed to growth through acquisitions, most notably through its buy of Johnson Products in June 1998 for a reported $85 million. Through that deal, Carson also gained control of the Dermablend corrective cosmetics business. Carson had also purchased the Let’s Jam hair maintenance brand from New Image Labs in April 1997 for a reported $5.6 million and also in 1997, briefly owned U.S. and Puerto Rican rights to the Cutex brand.
According to industry tracking firm Information Resources Inc., Carson’s products are among the top 10 brands in nearly all African-American hair care segments, including shampoos, hairdressing products, styling products, chemical service items, hair coloring, curl and wave maintenance, men’s styling and children’s products. According to IRI, the company also ranks in the top-10 vendors of ethnic shave and skin care products.
As reported, Carson’s African business — which comprises about 25 percent of its overall sales — is currently handled by a South African subsidiary, Carson Holdings Ltd., based in Johannesburg, South Africa. When the U.S. tender offer is complete, L’Oreal plans to make an offer for the minority interest in Carson Holdings Ltd. through Elebelle Ltd., L’Oreal’s wholly owned South African subsidiary.