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Shiseido buys Bare Escentuals for US$1.7b to expand abroad
By Tomoko A. Hosaka |
January 16, 2010, Saturday
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Print Edition
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SHISEIDO Co is buying San Francisco-based Bare Escentuals Inc in a US$1.7 billion deal that brings together one of the world's oldest cosmetics companies with a hip, rising star.
The acquisition announced yesterday is Shiseido's biggest purchase since its founding in 1872 as Japan's first Western-style pharmacy.
The Tokyo-based company will offer to buy all outstanding stock of Bare Escentuals for US$18.20 a share, which represents a 43 percent premium over its closing price on Nasdaq on Thursday. The transaction was unanimously approved by both boards of directors.
Bare Escentuals will operate as a separate division of Shiseido under current Chief Executive Leslie Blodgett, who is nearly as popular in the United States as the company's line of mineral-based makeup.
Through regular appearances on the QVC shopping network and infomercials, she is credited with single-handedly taking Bare Escentuals from a small, niche player to an industry leader and innovator. Sales are up almost 20-fold from when she first took over in 1994 to US$556 million in 2008.
Bare Escentuals now boasts a devoted following and sells its hit bareMinerals foundation and other skin and body care products through department stores, specialty retailers and direct marketing. The company says its mineral foundation, which resembles loose powder, leaves the skin silky and flawless without potential chemical irritants.
But with 85 percent of revenue generated in the US, the company decided it could use outside help to grow overseas.
"This is an exciting day for all of us at Bare Escentuals, and I couldn't be more pleased to be joining forces with the team at Shiseido," she said in a statement. "Together with Shiseido, we look forward to bringing our mineral-based beauty products to even more women worldwide."
For Shiseido, the acquisition represents a major step in its own bid to expand abroad amid a shrinking home market.
The company is Japan's biggest cosmetics company with operations in more than 70 countries and regions, but global business accounted for just 38 percent of the company's US$7.5 billion in sales last fiscal year. Its presence in the US remains limited, making up 8 percent of total revenue.
Shiseido aims to boost overseas sales to 50 percent of overall revenue by 2017. After the deal, that figure will rise to 42 percent, the company estimates. Moreover, it says it believes in Bare Escentuals' global growth potential as increasing numbers of women turn to cosmetics with more natural ingredients.
"This acquisition further enables Shiseido to move toward our goal of becoming a global player," said President Shinzo Maeda.
Shiseido's well-established Asian distribution channels can help Bare Escentuals tap lucrative markets in the region, he said.
The acquisition announced yesterday is Shiseido's biggest purchase since its founding in 1872 as Japan's first Western-style pharmacy.
The Tokyo-based company will offer to buy all outstanding stock of Bare Escentuals for US$18.20 a share, which represents a 43 percent premium over its closing price on Nasdaq on Thursday. The transaction was unanimously approved by both boards of directors.
Bare Escentuals will operate as a separate division of Shiseido under current Chief Executive Leslie Blodgett, who is nearly as popular in the United States as the company's line of mineral-based makeup.
Through regular appearances on the QVC shopping network and infomercials, she is credited with single-handedly taking Bare Escentuals from a small, niche player to an industry leader and innovator. Sales are up almost 20-fold from when she first took over in 1994 to US$556 million in 2008.
Bare Escentuals now boasts a devoted following and sells its hit bareMinerals foundation and other skin and body care products through department stores, specialty retailers and direct marketing. The company says its mineral foundation, which resembles loose powder, leaves the skin silky and flawless without potential chemical irritants.
But with 85 percent of revenue generated in the US, the company decided it could use outside help to grow overseas.
"This is an exciting day for all of us at Bare Escentuals, and I couldn't be more pleased to be joining forces with the team at Shiseido," she said in a statement. "Together with Shiseido, we look forward to bringing our mineral-based beauty products to even more women worldwide."
For Shiseido, the acquisition represents a major step in its own bid to expand abroad amid a shrinking home market.
The company is Japan's biggest cosmetics company with operations in more than 70 countries and regions, but global business accounted for just 38 percent of the company's US$7.5 billion in sales last fiscal year. Its presence in the US remains limited, making up 8 percent of total revenue.
Shiseido aims to boost overseas sales to 50 percent of overall revenue by 2017. After the deal, that figure will rise to 42 percent, the company estimates. Moreover, it says it believes in Bare Escentuals' global growth potential as increasing numbers of women turn to cosmetics with more natural ingredients.
"This acquisition further enables Shiseido to move toward our goal of becoming a global player," said President Shinzo Maeda.
Shiseido's well-established Asian distribution channels can help Bare Escentuals tap lucrative markets in the region, he said.
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