L’OREAL will acquire a 10 per cent stake in Swiss skin care firm Galderma from a group of major shareholders, the two companies said on Monday (Aug 5), as the French firm seeks a cut of the profits from the booming medical cosmetics market.
Galderma, originally set up as a joint venture between Nestle and L’Oreal before the latter sold its 50 per cent stake in 2014, listed an initial tranche of its stock in late March.
L’Oreal will now acquire a 10 per cent stake for an undisclosed premium from Sunshine SwissCo – a consortium led by Swedish private equity firm EQT – Abu Dhabi Investment Authority (ADIA) and Auba Investment.
Galderma, which had a market capitalisation of almost 16 billion Swiss francs (S$24.8 billion) at Friday’s market close according to LSEG data, signed a memorandum of understanding with L’Oreal to work on research and development collaboration.
“It allows us to explore partnering in the fast-growing aesthetics market, a key adjacency to our own pure beauty play,” L’Oreal CEO Nicolas Hieronimus said of the stake purchase.
“We fully support Galderma’s management and its strategy…respect its independence and are very confident in its long-term growth potential.”
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Shares in L’Oreal fell 1 per cent while shares in Galderma, which sells Cetaphil, a product for damaged and sensitive skin, sunscreen and medicines for acne, psoriasis and skin cancer, were 4 per cent higher at 0705 GMT.
“The stake is positioned as a strategic interest, to facilitate cooperation on product development, but we assume that this is also a way to get closer to Galderma with a view of higher ownership/control over time,” said analysts at Jefferies.
L’Oreal’s dermatological beauty division, which includes the CeraVe and La Roche-Posay brands, has been growing in high-double digits for the last couple of years, boosted by social media and consumer interest in science since the Covid pandemic.
But growth in the unit slowed in the second quarter to 10.5 per cent, missing estimates. Hieronimus cited growing competition as one of the factors weighing on previously surging growth.
The global aesthetics market is predicted to grow to US$25.9 billion from US$15.4 billion last year, according to MarketsandMarkets.
L’Oreal said it will not seek to be represented on Galderma’s board of directors. The transaction will be funded with L’Oreal’s available cash and credit lines, and is expected to be completed in the coming days, the French company said. REUTERS
