New York-based Coty Inc. (NYSE: COTY) said it agreed to acquire a 60% stake of online peer-to-peer social selling beauty platform Younique for $600 million in cash. Younique’s founders, siblings Derek Maxfield and Melanie Huscroft, will own the remaining 40%.
Younique was founded in Utah in 2012. Its makeup and skin care products are sold through a peer-to-peer e-commerce platform, which enables independent presenters to market and distribute beauty products directly to consumers. The platform is built for mobile-first e-commerce, with 200,000 active presenters and over 4.1 million consumers in 10 countries, including the U.S., U.K., Canada, Australia, New Zealand, Germany, Mexico, France, Spain and Hong Kong.
Younique expects to generate approximately $400 million in net revenues in 2016.
Coty is one of the world’s largest beauty companies with approximately $9 billion in revenue. Its strong entrepreneurial heritage has created an iconic portfolio of leading beauty brands. Coty is the global leader in fragrance, a strong number two in professional salon hair color & styling, and number three in color cosmetics. Coty was founded in Paris in 1904.
Coty operates three divisions – Coty Consumer Beauty, which is focused on color cosmetics, retail hair coloring and styling products, body care and mass fragrances sold primarily in the mass retail channels with brands such as Covergirl, Max Factor and Rimmel; Coty Luxury, which is focused on prestige fragrances and skincare with brands such as Calvin Klein, Marc Jacobs, Hugo Boss, Gucci and philosophy; and Coty Professional Beauty, which is focused on servicing salon owners and professionals in both hair and nail, with brands such as Wella Professionals, Sebastian Professional and OPI. Coty has approximately 20,000 colleagues globally and its products are sold in over 130 countries.
“Derek and Melanie are tremendous entrepreneurs who have built one of the most engaging and fastest growing e-commerce companies in beauty,” said Camillo Pane, Coty’s CEO. “Alongside the rest of Younique’s team and in partnership with their presenters, they have been able to impact the lives of millions of consumers across a number of countries with a mission to uplift and empower women.”
“We are thrilled to have Coty as a partner and expect that together we will be able to take Younique to new heights,” said Younique’s CEO Maxfield. “Coty and Younique share a passion for beauty, an entrepreneurial spirit, as well as complementary missions. I am very excited about this partnership and everything it can bring to Younique’s employees, presenters and loyal consumers across the world.”
Younique will operate as a separate business within Coty’s Consumer Beauty division. It will continue to be led by its current CEO, Derek Maxfield, Chief Visionary Officer, Melanie Huscroft, and Younique’s management team, in partnership with Coty.
The partnership will combine Younique’s high growth e-commerce platform and social selling direct-to-consumer business model with Coty’s beauty product R&D and innovation know-how, as well as its extensive manufacturing and supply chain capabilities. The companies expect to accelerate the product offering and geographical expansion of Younique.
The deal is subject to customary closing conditions and is expected to close during Coty’s 2017 fiscal third quarter. The transaction is expected to be immediately accretive to Coty’s top-line growth, EBITDA margin and FY17 earnings. The acquisition will be funded through a combination of cash on hand and available debt facilities with marginal impact on Coty’s leverage ratio, it said.
WAVE OF BEAUTY AND PERSONAL CARE SECTOR EXITS
The move follows a recent global wave of deals and consolidation in the beauty and personal care market.
This week, French leading global beauty company L’Oreal (EPA: OR) said it agreed to acquire the skincare brands CeraVe, AcneFree and Ambi from Valeant Pharmaceuticals (NYSE/TSX: VRX) for $1.3 billion.
In September, Los Angeles-based beauty and consumer goods startup The Honest Company, co-founded by actress Jessica Alba and known for its eco-friendly products, was said to be seeking an exit, including a sale of the company.
In July, L’Oréal SA (EPA: OR), the world’s leading beauty and cosmetics company, controlled by the family of Liliane Bettencourt, the wealthiest person in France and the wealthiest woman in the world, agreed to acquire IT Cosmetics, a top-selling prestige makeup and skincare brand in the United States, for $1.2 billion in cash.
Likewise, consumer products giant Unilever (LSE: ULVR) agreed to acquire men’s personal grooming startup Dollar Shave Club (DSC), for $1 billion.
A few days earlier in the summer, GHD’s rival Tangle Teezer, a British manufacturer of detangling hairbrushes founded and owned by hair colorist Shaun Pulfrey, was said to have hired investment bank Robert W. Baird & Co. to shop the company for £200 million.
In June, billionaire Ronald Perelman‘s Revlon Inc. (NYSE: REV) agreed to acquire Elizabeth Arden Inc. (NASDAQ: RDEN), a legendary global prestige beauty products company with a portfolio of beauty brands sold in over 120 countries, in a deal valued at $870 million.
Two weeks earlier, Johnson & Johnson (NYSE: JNJ) agreed to acquire Vogue International LLC, a manufacturer and distributor of salon-heritage hair care and other personal care products, including OGX, FX, Proganix and Maui Moisture, from private equity firm Carlyle Group LP (NASDAQ: CG) and the company’s founder and CEO Todd Christopher, for $3.3 billion.
Also in early June, Japanese global cosmetics company Shiseido Co. Ltd. (TYO: 4911) agreed to acquire Gurwitch Products LLC, a Houston, Texas-based marketer of global prestige cosmetics and skincare brands including Laura Mercier and RéVive, from Alticor Inc., the owner of Amway.
In May, private equity firm Clayton, Dubilier & Rice agreed to acquire High Ridge Brands Co., which owns a portfolio of personal care brands, from private equity firm Brynwood Partners, for $415 million.
In April, Fosun International (HKSE: 0656), one of China’s largest investment firms chaired by billionaire Guo Guangchang, agreed to acquire Israeli cosmetics company Ahava Dead Sea Labs for $77 million.
In February 2016, Canadian cosmetics and skincare company Groupe Marcelle acquired Montreal-based Lise Watier Cosmétiques, through an $18 million investment by Caisse de dépôt et placement du Québec (CDPQ),becoming the largest Canadian company in the beauty industry.