Why did L’Oréal decide to acquire three active cosmetics brands from Valeant for $ 1.3 billion?



THE‘Oréal is one of the leaders in the active cosmetics market, a segment that happens to be the fastest growing segment for the company (8% year-on-year growth in 2015). With the aim of further developing its active cosmetics segment, L’Oréal has announced its intention to to acquire the skincare brands CeraVe, AcneFree and Ambi from Valeant Pharmaceuticals for $ 1.3 billion . According to Frédéric Rozé, President and CEO of L’Oréal USA, the brands will be appropriate additions to the L’Oréal portfolio which currently contains names such as La-Roche Posay, Vichy and Skinceuticals. The brands to be acquired are very popular with healthcare professionals and should almost double the turnover of its cosmetics division active in the United States.

Brands are also expected to strengthen the company’s links with healthcare professionals who are essential to product development in the active cosmetics market. L’Oréal’s market position in North America, the fastest growing geographic area for active cosmetics, is expected to grow further due to the acquisitions. L’Oréal’s influence in other geographical areas, as a world leader in cosmetics, gives it the opportunity to extend the presence of the brands acquired beyond North America.

Founded in 2005, CeraVe is known for its advanced skin care products such as cleansers, moisturizers, healing ointments, sunscreens, and baby products. Considered one of the fastest growing companies in North America, the company has posted an average growth rate of 20% over the past two years. AcneFree is known for its over-the-counter cleansers and acne treatment products in the United States, while Ambi distributes products that meet the needs of multicultural consumers. The annualized revenue of the three brands combined is estimated to be approximately $ 168 million.

The global beauty and personal care industry is expected to double its current size over the next ten to fifteen years. The cosmeceuticals or active cosmetics market will benefit from this growth as it is one of the most dynamic segments of the beauty and personal care market. According to a recent report by Research and markets , the global cosmeceuticals market is expected to grow at a CAGR of nearly 6% between 2017 and 2021. The largest markets are expected to be the United States, China, Brazil, Japan, and India. The acquisition of L’Oréal will help it continue to develop its active cosmetics business and thus increase its market share in segments such as skin care.

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1) The purpose of these analyzes is to help readers focus on a few important points. We hope that such a light-weight communication is thought-provoking and encourages readers to comment and ask questions in the comments section, or via email to [email protected]

2) The numbers mentioned are approximate values ​​to help our readers remember key concepts more intuitively. For precise figures, please refer to our complete analysis for L’Oréal

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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