 "L'oreal, Beauty, Skincare, Galderma")
L’Oreal’s dermatological beauty division, which also includes La Roche-Posay brand, has grown by high-double digits in recent years | Image: Wikimedia Commons
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, as the French firm seeks a cut of the profits from the booming injectable cosmetics market.
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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.
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L’Oreal will now acquire a 10 per cent stake for an undisclosed premium from Sunshine SwissCo AG – a consortium led by Swedish private equity firm EQT – Abu Dhabi Investment Authority (ADIA) and Auba Investment Pte. Ltd.
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Shares in Galderma, which had a market capitalisation of almost 16 billion Swiss francs ($18.85 billion) at Friday’s market close according to LSEG data, jumped more than 7 per cent after the news and were on track for their best day since listing.
Shares in L’Oreal fell around 1 per cent.
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The stake, worth 1.6 billion Swiss francs based on Galderma’s market cap, is small for the French firm, Europe’s sixth largest.
But it marks a shift in its strategy, giving it a stake in injectable products that reduce wrinkles such as fillers and neuromodulators, which include botox, for the first time.
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“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 in a statement.
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About half of Galderma’s revenue comes from injectables. The market was worth 9.3 billion euros last year, Hieronimus told analysts on a call.
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“The penetration rate of these procedures already stands at mid-single digits and looking at the number of people who consider using these procedures, the penetration rate could double in the next decade,” he said.
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The two companies also signed a memorandum of understanding to work on research and development collaboration.
The deal will ultimately enable the pair to jointly develop new products to expand their respective portfolios, said a Galderma statement.
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“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.
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L’Oreal will not take a seat on Galderma’s board to prevent any relationship on similar business activity, executives said.
The two firms also compete in skincare with Galderma’s Cetaphil brand and L’Oreal’s CeraVe.
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L’Oreal’s dermatological beauty division, which also includes the La Roche-Posay brand, has grown by high-double digits in recent years, boosted by social media and consumer interest in science since the COVID pandemic.
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But growth in the unit slowed in the second quarter to 10.5 per cent, missing estimates, partly a result of increasing competition.
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The global aesthetics market is predicted to grow to $25.9 billion by 2028 from $15.4 billion last year, according to MarketsandMarkets.
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“The techniques of injections have evolved very strongly, it’s easier to do and less painful,” added Hieronimus.
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(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Aug 05 2024 | 5:08 PM IST
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