Q1 2015
Beauty Care M&A Report
Q1’15 Deal Volume Strong
Sale Talks of High-Profile Beauty Care Brands Lead Start of Q2
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Q1’15 Deal Volume Strong. Sale Talks of High-Profile Beauty Care Brands Lead Start of Q2
Q1 2015
M&A activity in the Beauty Care sector continued its strong momentum into 2015 with 19 deals in the first quarter—just off the pace of 20
deals recorded in Q4’14. We believe there will be continued strength in the sector based on attractive market dynamics, talk about
upcoming sales of certain high-profile brands, and our own Beauty Care client roster and pipeline.
Q1’15 M&A highlights include:
• Deal volume in Q1’15 (19 deals) remained relatively steady with Q4'14 (20 deals) and Q1'14 (21 deals).
• Private equity groups re-emerged on the scene with acquisitions by Wasserstein & Co., Castanea Partners, and San Francisco
Equity Partners.
• Strategic buyers continue to maintain a presence, with acquisitions by Unilever, Markwins and Emami.
• Rumors abound regarding potential sale and IPO processes, including Procter & Gamble’s beauty care brands, Douglas and IT
Cosmetics (see Industry News below for details).
Steve Davis, Managing Director, Head of Beauty & Personal Care, SDavis@IntrepidIB.com
Recently Closed Transactions
Wasserstein & Co. Acquired Paris Presents – Wasserstein & Co., along with co-investors Ontario Pension Board
and Northwestern Mutual, announced the acquisition of Paris Presents, Inc. from private equity firm Mason Wells.
Headquartered in Gurnee, Ill., Paris Presents is a provider of branded cosmetic and bath accessories to mass
merchandisers, drug stores, specialty beauty stores and online retailers. The company’s brands include Real
Techniques, Eco Tools, Body Benefits, Studio Basics and Razz Bath and Shower Accessories.
Thymes Acquired by Castanea – Thymes was acquired by Castanea Partners and a syndicate of other investors,
including Stanfield Capital, RCPDirect, Northstar Mezzanine Partners and management, from Stone-Goff Partners.
Founded in 1982 and headquartered in Minneapolis, Minn., Thymes creates and markets unique, branded fragrances
across the bath & body and home fragrance categories. Core products include body and hand lotions, bar soaps and
bubble baths, candles, fragrance mists, potpourris, reed diffusers and refresher oils. Thymes sells its products primarily
through independent specialty stores.
Macy’s to Acquire Bluemercury – Macy’s announced the acquisition of luxury beauty products and spa retail chain
Bluemercury for $210 million in cash. Bluemercury began in 1999 as an online business and has since expanded to 59
stores in 18 states. According to industry sources, Bluemercury generated annual sales in excess of $100 million and
EBITDA of more than $10 million, representing a revenue multiple of 2.1x and an EBITDA multiple of over 20x. Macy’s
plans to expand the Bluemercury footprint and bring Bluemercury boutiques and products into some of its department
store locations. The deal is Macy’s first acquisition since 2005 and is expected to close in May.
Unilever to Acquire British Skincare Brand – Unilever announced the acquisition of REN Skincare, a natural,
premium skincare brand with the motto of “performance, purity, pleasure.” Based in the U.K., REN reported sales of
over $60 million in 2013 and sells predominantly through pharmacies and specialty stores. The acquisition furthers
Unilever’s emphasis on personal care (versus food), strengthens its positioning in the premium segment and provides a
strong presence in the fast growing natural skincare category. The deal is expected to close in May.
Markwins Adds Youth Consumer Brands to Portfolio – Markwins International Corp. acquired Aspire Brands’ assets
Bonne Bell and Lip Smacker. Bonne Bell markets color cosmetics and Lip Smacker offers lip glosses and balms, with
each brand targeting the youth market. Complementing an existing portfolio that includes Physicians Formula, wet n
wild, The Color Workshop, The Color Institute, POP and Black Radiance, the acquisition successfully expands
Markwins’ brand portfolio and widens its target consumer demographic.
Hain Celestial Expands Canadian Beauty Care Presence – Natural products company Hain Celestial expanded its
footprint in the health and beauty care category in Canada with the acquisition of Belvedere International. Founded in
1981 and based in Mississauga, Canada, Belvedere manufactures approximately 200 baby, body and hair care
products primarily under the Live Clean brand. The Live Clean brand is the leading natural hair care and baby care
brand in Canada. According to industry sources, Belvedere generated approximately $25 million in net sales in 2014.
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Recently Closed Transactions (Cont.)
Emami Enters Organic Personal Care Category Through Acquisition of Fravin – Emami Ltd., based in India,
made its third acquisition in the past six months with the purchase of a 66.7% stake in Fravin Pty Ltd. Fravin,
based in Australia, is a manufacturer of natural and organic personal care products with a focus on hair care, skin
care and baby care products. The acquisition expands Emami’s presence outside of India and gives the company
a foothold in the natural and organic personal care market.
San Francisco Equity Acquired Japonesque – San Francisco Equity Partners acquired a majority stake in
Japonesque in partnership with current owner Karen McKay. Founded in 1984, Japonesque is a beauty company
with a deep heritage of creating products inspired by the professional makeup tools used in Kabuki theatre in
Japan. The Japonesque product line includes makeup brushes, eyelash curlers, tweezers, makeup cases and
other beauty accessories along with a recently launched color cosmetics line. Japonesque products are sold at
high-end salons, spas, beauty supply stores and specialty shops worldwide.
Industry News
More Changes in Beauty Care at Procter & Gamble – In January, Procter & Gamble announced a reshuffling of
its top beauty care executives. David Taylor, the group President for global health and grooming, will take over the
company’s global beauty unit, which generates over 40% of the company’s revenue. He replaces Deb Henretta,
who will oversee global online business. The changes come amid flat sales growth in the beauty care division and
discussions of a sale or IPO of some of its beauty brands (see further details below).
E-Commerce Accounts for 10% of Beauty Sales – According to Kline Group, a market research consultancy
firm, e-commerce sales account for only 10% of beauty care sales. Internet and mobile sales will continue to grow
but “physical brick-and-mortar stores are not going away and will still account for the bulk of beauty care sales,”
said Donna Barson, a senior associate with the Kline Group.
Energizer Nears Split and Reveals Division Names – Pursuant to the previously announced split of Energizer,
the new personal care division will be called Edgewell Personal Care. With annual revenue of approximately $2.6
billion, Edgewell will comprise the Schick, Wilkinson Sword, Edge and Skintimate brands in shave preparation and
razors; Playtex, Stayfree, Carefree and o.b. in feminine care products; Playtex and Diaper Genie in the infant care
category; and Banana Boat and Hawaiian Tropic sun care products. The split is expected to be completed July 1.
Prestige Beauty Care Category Continues to Outperform – According to The NPD Group, the U.S. prestige
beauty industry expanded 3% in 2014, reaching $11.2 billion in sales. The sector was driven by makeup with 6%
growth. In the U.S., the prestige market outpaced the mass market which remained flat with 2013 sales,
according to Nielsen.
Rodan & Fields Rumored to Be on the Block – According to industry reports, San Francisco-based skin care
company Rodan & Fields is evaluating a sale of the company. The company sells skin care products targeting
wrinkles, blemishes and other conditions through a direct sales model. The company’s sales force consists of
‘consultants’ who target their personal networks of friends and family members. Estée Lauder acquired Rodan &
Fields in 2003, but sold it back to its founders in 2007.
Procter & Gamble Sale Process of Beauty Brands Underway – According to Bloomberg, Procter & Gamble
has begun the sale process of some of its beauty care brands. The company has reportedly sent out sale
documents for a number of its beauty care brands, including the Wella hair care division, the fragrance portfolio
and select cosmetic brands. Industry sources said that interested parties include Henkel, Revlon and Coty –
although they are likely interested in different brands in the portfolio. It is further rumored that P&G is also
exploring the IPO of some of its beauty care brands or a potential spin off of the unit.
Advent Exploring Exit Options for Douglas – Private equity firm Advent International is preparing for an exit
through a sale or IPO of the German perfume chain Douglas, which it acquired along with the Kreke family in
2013. According to industry sources, Advent will run a dual track process. The company is expected to generate
revenue of over $2.6 billion and EBITDA of over $300 million in 2015.
IT Cosmetics Exploring Options – According to industry sources, IT Cosmetics is considering a sale or IPO. The
company was founded by former TV news anchor Jamie Kern Lima and her husband Paulo Lima and is partially owned
by TSG Consumer Partners and Guthy-Renker. IT Cosmetics is known for problem-solving makeup and skin care
products and is sold in Ulta and on QVC. The company generated $200 million in retail sales in 2014 (up from
approximately $80 million in 2013) and is projected to reach $250 million in 2015, according to industry sources. The
sale or IPO would represent another successful beauty care exit for TSG, which divested e.l.f. Cosmetics, Perricone
MD, Alterna, Kenra, Sexy Hair and Pevonia over the past year.
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Publicly Traded Companies (USD Millions)
Last Twelve Months
Company
Revenue Growth
Enterprise Value / LTM
Enterprise Value
Market Cap
Revenue
Gross Profit
EBITDA
1-year
3-year
Revenue
EBITDA
$5,107
$3,472
$8,851
61.8%
8.8%
(11.1%)
(7.3%)
0.6x
6.5x
$17,948
$19,637
$6,707
62.3%
15.4%
2.3%
3.7%
2.7x
17.4x
$10,657
$8,347
$4,492
59.6%
15.8%
(1.4%)
3.7%
2.4x
15.1x
$840
$465
$1,007
42.3%
(2.9%)
(22.2%)
(6.2%)
0.8x
NA
$31,469
$31,440
$10,951
80.4%
19.1%
5.4%
5.1%
2.9x
15.0x
$847
$1,011
$499
50.4%
12.7%
(11.4%)
(6.7%)
1.7x
NA
$101,580
$100,937
$24,046
71.1%
20.6%
1.8%
3.5%
4.2x
20.6x
$3,756
$2,157
$1,941
65.7%
16.9%
29.9%
12.9%
1.9x
11.5x
$7,452
$7,131
$6,560
74.9%
9.4%
7.4%
5.1%
1.1x
12.0x
Mea n
63.2%
12.9%
0.1%
1.5%
2.0x
14.0x
Medi a n
62.3%
15.4%
1.8%
3.7%
1.9x
15.0x
5-Year Historical Trading Multiples
TEV / EBITDA Multiples
15.0x
TEV / Revenue Multiples
2.5x
2.0x
12.0x
1.5x
9.0x
1.0x
5-Year Average: 11.2x
6.0x
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
5-Year Average: 1.5x
Mar-15
0.5x
Mar-10
Global Beauty Care Equity Price Performance
Past Three-Month Equity Price Performance
40%
24.8% 22.9%
20%
Mar-11
Mar-12
Mar-13
Mar-14
Global Beauty Care M&A Transactions
# of Announced Beauty Care Transactions by Quarter
30
19.5% 17.3%
21
11.0%
18
20
8.2%
Mar-15
16
15
20
19
15
(20%)
(40%)
Inter Parfums
0%
(0.8%)
10
6
(10.7%)
(18.8%)
0
Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15
Note: Indices calculated using a median equally-weighted basis; All data sourced from S&P Capital IQ as of 3/31/2015.
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Beauty & Personal Care Practice
Cosmetics
Hair Care
Skin Care
Professional
Products
Natural Products
Fragrances
Body Care
Equipment / Tools
Select Transactions
dba
and its subsidiaries
has been acquired by
a portfolio company of
a portfolio company of
has received a growth
equity investment from
has been acquired by
has been acquired by
A subsidiary of
has been acquired by
*
*
*
in partnership with Chief
Executive Officer David Berglass
Continental Fragrances, Ltd.
dba
and its affiliates,
subsidiaries of
has been acquired by
has received a growth
equity investment from
has been acquired by
has been recapitalized by
*
owners of
has been acquired by
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*
*Executed by principals of Intrepid while at previous firms.
Beauty & Personal Care Team
Steve Davis
Shahriar Attaie
Managing Director
Head of Beauty & Personal Care
SDavis@IntrepidIB.com
Vice President
SAttaie@IntrepidIB.com
About INTREPID
Intrepid Investment Bankers is a specialty investment bank that
provides M&A, capital raising and strategic advisory services to
middle-market companies across various industry sectors. We have a
unique culture rooted in our founders’ successful 30-year history of
advising entrepreneur and family-owned businesses, financial
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banker immersion in each process. We augment our international
capabilities through our membership and active participation in M&A
International Inc., an exclusive global alliance of select independent
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