PARIS — L’Oréal has signed an agreement of intent to acquire Chinese makeup and skin care brand Yue-Sai and its Shanghai industrial site from Coty Inc.
This story first appeared in the January 27, 2004 issue of WWD. Subscribe Today.
Terms of the deal were not disclosed.
The news regarding Yue-Sai, which last year generated sales of $47.4 million at current exchange rates, comes just weeks after L’Oréal announced its intention to acquire Chinese mass-market skin care brand Mininurse.
“After Mininurse at the end of last year, this new acquisition confirms our will to continue accelerating our growth in the strategic Chinese market,” said Lindsay Owen-Jones, president and chief executive officer of L’Oréal, in a statement.
Yue-Sai products are sold in 800 department stores in 240 Chinese cities.
In 2003, the French beauty giant’s sales in China rose 69.3 percent on a constant basis, to $198.3 million.
In other L’Oréal news, the cosmetics firm has given the nod to Sanofi-Synthelabo’s takeover offer for rival pharmaceutical firm Aventis.
The hostile bid was launched here Monday and is valued at $59.6 billion.
L’Oréal, which holds a 19.5 percent stake in Sanofi-Synthelabo, published a statement saying it has approved the takeover offer and “will approve the issuance of new shares that will be submitted to the shareholder’s meeting.”
L’Oréal also said it will keep its Sanofi-Synthelabo shares. Upon the transaction’s completion, L’Oréal intends to stop consolidating its Sanofi-Synthelabo stake under the equity method. Rather, the beauty firm will reflect dividends received from the pharmaceutical firm in its income statement.
L’Oréal currently generates about 20 percent of its profits from the Sanofi-Synthelabo business.
Aventis said Monday it rejects Sanofi-Synthelabo’s hostile bid.
As reported, L’Oréal and Total, which currently holds a 24.4 percent share of Sanofi-Synthelabo, said late last year that they will not renew their shareholder pact, which is due to expire Dec. 2, 2004, concerning the pharmaceutical company. The agreement states that both firms must maintain at least a 19.4 percent stake in Sanofi-Synthelabo.
Financial analysts say it is unlikely that L’Oréal will reduce its holding — valued at $7.48 billion after taxes — in the near term.
L’Oréal stock closed Monday on the Paris bourse down 1.95 percent at a unit price of $81.36. Sanofi stock fell 5.63 percent, to $67.96; Aventis stock rose 2.95 percent, to $73.88.