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| A Sephora store in Gangnam, Seoul / Courtesy of Sephora |
By Anna J. Park
LVMH Group, the world's largest luxury group, which operates the global beauty store Sephora, has joined a preliminary takeover bid to acquire a controlling stake of Able C&C, the operator of cosmetics brand Missha, according to media reports and sources.
While the global luxury conglomerate's participation is not officially confirmed as of yet, investment banking (IB) sources say that Asian strategic investors (SI) from Japan, Korea and China joined the bidding war to acquire the Korean cosmetics company.
According to sources, more than five overseas strategic investors, mostly Asian distribution and biopharma corporations from China and Japan, along with local fashion businesses, participated in the preliminary bid earlier this week to acquire a 59.2 percent stake as well as the management rights of Able C&C. It is expected that the sale price will be set at around 100 to 150 billion won ($76 to 114 million).
Given that the main bid is slated to be held sometime in May, the short list of potential buyers for the deal could still change. Market watchers are paying attention to whether IMM Private Equity (PE) will be able to make an exit from its investment into the cosmetics company this time.
It has been six years since IMM PE acquired the controlling stake of the company for about 400 billion won in 2017. Following the private equity firm's takeover, the cosmetics company suffered a series of blows to its earnings, due to the COVID-19 pandemic as well as changing fads in the purchasing of cosmetics.
The annual revenue of 434.6 billion won posted in 2016 went down to 262.9 billion won in 2021. During the same period, its operating profits of 24.4 billion won turned into an operating loss of 22.4 billion won in 2021. Amid the plunge in earnings and the subsequent free fall of Able C&C's stock price, IMM PE faced an event of default (EOD) last year as it failed to extend some of the financing. It forced the private equity firm to sell the cosmetics company despite the financial losses it incurred.
Despite IMM PE's pain, Able C&C had a successful turnover. It posted an operational profit of 10.1 billion won last year. With the country's mandatory mask-wearing obligation lifted as of Monday, the company's earnings are expected to grow further.
Operating over 30,000 stores in 46 countries, Able C&C has long been recognized as a powerhouse of major K-beauty brands, including Missha, A'pieu, Stila, Chogongjin, Lapothicell, Cellapy and more.
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