French cosmetics large L’Oreal mentioned Sunday that it plans to accumulate U.S. rival Maybelline Inc., the third-largest U.S. maker of magnificence merchandise, in a inventory and debt transaction valued at $660 million.
The deal would additional solidify Paris-based L’Oreal’s place because the world’s largest cosmetics maker and would catapult it forward of No. 1 Procter & Gamble Co.’s Cowl Lady manufacturers and No. 2 Revlon Inc. It could have a few third of the U.S. market, in contrast with about 8% now.
Cosmair Inc., the principal North American subsidiary of L’Oreal, would purchase all excellent Maybelline widespread inventory for $36.75 per share in money, or about $510 million. Cosmair would additionally assume $150 million in debt. L’Oreal will begin a money tender provide inside every week for all of Maybelline’s roughly 14 million shares.
The inventory portion of the transaction is a premium of greater than 18% over Maybelline’s closing value Friday of $31 per share, up 75 cents on the New York Inventory Alternate. The deal is anticipated to shut early subsequent yr.
Maybelline’s largest shareholder, Wasserstein Perella & Co., a New York-based funding firm, has agreed to promote its 3.Eight million shares, or 29% stake, within the firm, L’Oreal mentioned.
Memphis, Tenn.-based Maybelline leads within the mass-market colour cosmetics enterprise. Its merchandise embody Nice Lash mascara, Revitalizing make-up and Yardley of London. The objects are offered in about 100,000 low cost shops, supermarkets, drugstores and different mass-market shops in 40 nations. For 1994, Maybelline earned $16.6 million on gross sales of greater than $351 million.
L’Oreal makes L’Oreal, Lancome and Biotherm cosmetics, and its perfumes embody status manufacturers similar to Ralph Lauren, Giorgio Armani and Paloma Picasso. The corporate has 40,000 workers and operates in 150 nations.
L’Oreal posted 1994 gross sales of greater than $10 billion; its Cosmair unit had $1.four billion in U.S. gross sales for the yr.
“Maybelline’s beauty line might be a complement to L’Oreal’s beauty manufacturers, that are higher-priced, have extra selective distribution and attraction to a unique shopper,” L’Oreal mentioned in an announcement.
“The L’Oreal provide acknowledges the distinctive worth of Maybelline and its sturdy working outcomes and market place,” Maybelline Chairman Bruce Wasserstein mentioned. “The mixture of Maybelline with L’Oreal will make sure the continued success of the Maybelline model for a few years to return.”
The acquisition of Maybelline would give L’Oreal a “vital place within the broadly distributed colour beauty market within the U.S., akin to the place it has achieved in France, Belgium, Switzerland and Italy, and in Germany with its current acquisition of the Jade model,” L’Oreal Chairman Lindsay Owens-Jones mentioned.
The acquisition in October of Jade gave L’Oreal a 21% share of the cosmetics market in Germany, which is the third-largest after the U.S. and Japanese markets.
The Maybelline acquisition would create various advertising and marketing advantages, crucial being a stronger place within the conflict for retailer shelf area, mentioned Craig T. Weichmann, an analyst at Morgan Keegan & Co. in Memphis.
The $36.75-a-share value is a superb one for Maybelline, whose inventory has by no means exceeded $34, Weichmann mentioned. “For somebody to pay that prime a value, there must be a powerful strategic achieve from it,” he mentioned.
Wasserstein’s funding in Maybelline paid off even earlier than L’Oreal agreed to purchase it, Weichmann mentioned. “Wasserstein was in a position to make again the preliminary funding” when the corporate purchased again shares final yr, he mentioned. That introduced Wasserstein’s cost-basis all the way down to zero, and since then “they’re simply taking part in with the earnings.”
Wasserstein Perella purchased Maybelline from Schering-Plough Corp. for about $300 million in a leveraged buyout in 1990. Wasserstein Perella offered 30% of the corporate in an preliminary public providing in December 1992. A spokesperson for Wasserstein Perella mentioned Bruce Wasserstein will step down as Maybelline’s chairman.
Maybelline will turn out to be a separate division of Cosmair “with its personal character,” Cosmair spokesman John Sullivan mentioned. He mentioned the corporate has no “particular plans” for workers cuts.