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The Estée Lauder Cos. Invests in Korean Skin-Care Concern

The American beauty giant has taken an interest in Have & Be Co. Ltd., the Seoul-based parent of Dr. Jart+ and Do The Right Thing.

PARIS — The Estée Lauder Cos. Inc. is feeling “Gangnam Style.”

The American beauty giant will enter the burgeoning South Korean beauty scene by taking an interest in Have & Be Co. Ltd., the Seoul-based parent company of skin-care brands Dr. Jart+ and Do the Right Thing.

The Estée Lauder Cos. said Sunday it has signed an agreement to purchase a stake, but did not disclose further terms of the deal, which is expected to be finalized in December.

Dr. Jart+, a skin-care brand with products designed to address specific needs, was introduced online by Chinwook Lee in 2005. Billed to meld dermatological science and art (and whose name was inspired by the phrase “Doctor Joins Art”), it appeals to a wide-ranging consumer base, particularly Millennials, according to Lauder.

The brand, which helped pioneer the BB cream craze, is primarily distributed in Asia and the U.S. in department stores, and specialty multi- and e-commerce channels, including Sephora. Dr. Jart+’s portfolio includes moisturizers, cleansers, masks and serums.

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“This investment gives our company a strategic opportunity to develop a partnership with one of Korea’s most promising high-growth skin-care brands,” said Fabrizio Freda, president and chief executive officer of Lauder.

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Lee, who serves as ceo of Have & Be, pointed to the continued growth of Korean beauty firms worldwide, adding that the Lauder deal will provide “additional opportunities, support and guidance.”

“Global consumers look to Korea as a trendsetting market in beauty, and the Dr. Jart+ brand is part of the reason why,” added William P. Lauder, executive chairman of Lauder.

As part of the deal, Lauder also is investing in Do the Right Thing, a skin-care brand focused on men that’s said to fuse Korean innovation with New York style. Founded by Lee three years ago, it is today sold through various channels in Korea and in Sephora and Birchbox Man in the U.S.

Lauder received financial advice from BNP Paribas and legal counsel from Lowenstein Sandler LLP and Kim & Chang. Have & Be was given financial guidance by Michel Dyens & Co. and legal counsel from Skadden, Arps, Slate, Meagher and Flom LLP and Bae, Kim & Lee LLC.

Freda has been vocal about keeping a close eye on South Korea. During Bernstein’s 31st Annual Strategic Decisions Conference in May, the executive told investors that while South Korean brands have grown to be competitors, trends in the market have become a big opportunity. He likened the ultratrendy Asian nation’s influence on beauty to that of Paris’ special sway over fashion.

At the time he said: “It’s not only about Korean brands. We are also looking today at Korea as a place where we learn trends. But then we, with our brands, are the first to bring them around the world. Korean trends offer an opportunity for us.”

Also earlier in 2015, Freda in an investors’ call cited his criteria for potential acquisitions, saying they need to be winning brands, fit the company’s priorities and fill white space in the portfolio.

Lauder expects 1 percent of sales growth from acquisitions over the next three years. Most recently, in January, it purchased skin-care firm Glamglow. The company has also snapped up Editions de Parfums Frédéric Malle, Le Labo and Rodin Olio Lusso.

South Korean skin-care and makeup brands have swiftly gained interest in the U.S. As reported, a number of them have launched lately Stateside, including BRTC, Belif, Touch in Sol and The Skin Lounge. Companies like AmorePacific are making waves in China, too.

South Korea’s perception as a technological innovator and its celebrity influence are helping the business boom, especially in the midrange beauty market.