L’Oréal SA is acquiring luxury cosmetics brand Aesop for $2.53 billion.
According to a Bloomberg report, the French skincare company, which owns labels ranging from Maybelline to Lancome, has agreed to buy the Australian luxury brand from Natura & Co.
“The deal marks a shift in L’Oreal’s M&A strategy, having typically targeted brands at an earlier stage in their development to harvest significant revenue synergies,” Molly Wylenzek, an analyst at Jefferies, wrote in a note to clients, as stated in the Bloomberg report. “Aesop’s development is already well underway.”
L’Oreal bought Skinbetter Science, a US maker of skincare creams distributed via doctors, in recent months to boost another high-end segment it calls “active cosmetics,” with brands like as La Roche-Posay and SkinCeuticals, says the report.
“Aesop taps into all of today’s ascending currents and L’Oreal will contribute to unleash its massive growth potential, notably in China and Travel retail,” Nicolas Hieronimus, L’Oréal’s CEO, said in a statement.
Aesop was founded in 1987 and has developed high-end cachet among skincare devotees with its range of pricey creams and lotions for skin, hair and body made from ingredients like geranium leaf and mandarin rind, according to the report.
According to a Reuters report, L’Oreal is known for buying emerging labels, and scaling them up through its global distribution network, Ian Simpson, analyst with Barclays, said. He estimated Aesop will add around 1.2% to L'Oreal's organic sales this year, states the Reuters report.
"Given L'Oreal's strong track record of creating value from recent acquisitions, we expect this transaction to be helpful to sentiment, despite its limited size relative to L'Oreal," he said.