Kelly Kovak:
The first quarter of 2017 reinforces the thinking that private equity and strategics have changed the indie brand landscape. The transactions were heavily weighted on growth capital for indie brands leveraging technology and in fast-growth categories: Direct-to-consumer strategies (True Botanicals). Technology-based personalization (Skin Inc, MatchCo, Function of Beauty, MadisonReed). Natural/clean-positioned businesses (Yes To, Kopari, Tula, Drunk Elephant, Skinjay). This quarter also saw LVMH throw their hat into the ring after sitting on the sidelines acquiring Maison Francis Kurkdjian, one of the few niche fragrance brands left of scale. This quarter saw investments that have a view towards the future, fueling growth for a sale down the road.
UNILEVER ACQUIRES MINORITY STAKE IN TRUE BOTANICALS
WHO: Mill Valley, California-based True Botanicals was founded in 2014 by Hillary Peterson. Previously a marketing executive at Levi Strauss & Co., Peterson switched career paths after a thyroid cancer diagnosis caused her to evaluate all the beauty products she was using. A year ago, Christina Mace-Turner joined True Botanicals as partner and CEO to evaluate funding opportunities, revamp the brand’s website, and build digital infrastructure to fuel sales. The business is built on a direct-to-consumer distribution strategy but does sell to Barneys New York and natural beauty retailer Follain. However, the brand doesn’t anticipate brick-and-mortar sales to exceed 20 percent of sales.
Unilever Ventures is the venture capital and private equity arm of consumer packaged goods conglomerate Unilever PLC. They invest in young, promising companies, accelerating growth by providing access to Unilever’s global ecosystem, assets, and expertise. Unilever Ventures has poured an estimated €450 million into some 40 start-ups since its establishment in 2002. It concentrates on digital and beauty companies in the US, Europe, and Asia with investments ranging from 5 percent to controlling shares.
WHY: The seed funding will allow the brand to further expand the digital infrastructure.
IN THEIR OWN WORDS: “True Botanicals ticked a lot of boxes for us: an early, but demonstrable high growth trajectory, a great founding management team, an authentic brand with a distinctive positioning as well as an innovative, digitally native business model,” said Olivier Garel, the London-based head of ventures at Unilever Ventures, continuing, “From a business perspective, the direct distribution enables the company to invest much more than has been traditional in the product quality and the shopping experience.”
DETAILS:
– Unilever PLC has secured a minority stake in True Botanicals as part of a $3 million round of seed funding.
– Mats Lederhausen, managing partner of investment firm Be-Cause, former managing director of McDonald’s Ventures, and former chairman of Chipotle Mexican Grill Inc., participated along with lead investor Unilever Ventures in the seed round.
TULA SKINCARE RAISES SERIES A WITH L CATTERTON
WHO: Dr Roshini Raj, a board-certified gastroenterologist and internist, co-founded the brand in 2014 with Ken Landis—also co-founder of Bobbi Brown—and Dan Reich, a tech entrepreneur. TULA, meaning “balance” in Sanskrit, produces products that are formulated with patented Probiotic Technology designed to improve the overall health and appearance of skin by restoring and supporting the skin’s microbiome. The brand is currently only distributed in the US through SpaceNK and continues to be sold via QVC’s multiplatform retail model, as well as online.
L Catterton, the world’s largest consumer-focused private equity firm, was formed in 2016 through the partnership of Catterton, LVMH, and Groupe Arnault. L Catterton has significant experience investing in the beauty space, including brands such as Bliss, Cover FX, Frederic Fekkai, StriVectin, CLIO Professional, Dr. Wu, Kopari, Ideal Image, and Intercos Group.
WHY: The brand plans to grow in existing channels, with a focus on content and digital. The investment will be used to drive TULA’s rapid growth by funding marketing, working capital, and product development.
IN THEIR OWN WORDS: Jon Owsley, Co-Managing Partner, L Catterton Growth Fund, told Cosmetic Business: “TULA appealed to us because it is the first premium beauty brand to leverage probiotics across its entire product line. … We see a tremendous opportunity to accelerate TULA’s growth by capitalising on its innovative formulations, strong relationship with QVC, distinctive and digital-first positioning, and talented management team.” Julia Straus, Chief Executive Officer of TULA, added: “L Catterton brings deep knowledge of the consumer space and an unparalleled track record helping boutique beauty brands thrive and grow.”
DETAILS:
– According to WWD, industry sources estimated the round was worth $8 million.
– The business is said to have grown more than 400 percent in 2016.
– At QVC alone, Tula generated a 78% increase in distinct customers, according to Rachel Ungaro, vice president of buying for apparel, accessories, beauty, and jewellery.
– Terms of the transaction were not disclosed.
GARTNER ACQUIRES L2
WHO: Founded in 2010 by Scott Galloway, L2 is a member-based business intelligence firm that benchmarks the digital performance of brands. Their data and insights help brands identify digital strengths and weaknesses, hold internal teams accountable, and inform capital allocation decisions. L2 covers the following sectors globally: Auto, Beauty, Consumer Electronics, CPG, Food & Drinks, Hotels, Luxury, Retail, and Specialty Retail.
Gartner, Inc. is the world’s leading information technology research and advisory company delivering technology-related insight. Gartner works with clients to research, analyze, and interpret the business of IT within the context of their individual roles. Gartner is headquartered in Stamford, Connecticut, and has almost 9,000 associates, including 1,900 research analysts and consultants, operating in more than 90 countries.
WHY: The acquisition is highly complementary to Gartner’s existing digital marketing research and advisory services and is expected to further accelerate Gartner’s long-term growth in its marketing-focused business.
DETAILS:
– Gartner intends to fund acquisition using cash on hand and borrowing capacity under its existing revolver capacity.
– L2 will initially operate independently while Gartner focuses on consummating acquisition, and subsequently the integration, of CEB.
– Three years ago L2 raised $16.5 million in a round of venture capital, for use in expanding its international reach and accelerating development of its “Digital IQ Index” tool.
– Galloway told Forbes last April that L2’s sales doubled last year; this year sales were expected to be “more than $20 million, less than $50 million.”
– The terms of the transaction were not disclosed.
LVMH ACQUIRES MAISON FRANCIS KURKDJIAN
WHO: Launched in 2009 by perfumer Francis Kurkdjian and Marc Chaya, Maison Francis Kurkdjian was launched with a line of 25 products and a boutique in Paris. The wide-ranging brand takes a holistic approach to beauty, with a “fragrance wardrobe”—involving everything from eau de toilette to scented bubbles and textile cleaning products—meant for perfuming a person’s life 24 hours a day, seven days a week. Maison Francis Kurkdjian has two stores in Paris, three in Taiwan, one in Malaysia, and another in Dubai. Worldwide, the brand is in more than 40 countries, with more than 30 counters and a presence in almost 500 retailers, including Bergdorf Goodman, Aedes Perfumery, C.O. Bigelow Apothecary, and Neiman Marcus in New York.
The LVMH group comprises 70 brands that create high-quality products. It is the only group present in all five major sectors of the luxury market: Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewelry, and Selective Retailing. LVMH currently employs 125,000 people across the world and reported sales of 37.6 billion euros in 2016.
WHY: Niche fragrance brands continue to be hot in the current beauty landscape. LVMH’s acquisition is the latest move in the race among multinationals to snap up hot niche beauty labels as the trend for premium products keeps rising.
IN THEIR OWN WORDS: Bernard Arnault, chairman and chief executive officer of LVMH, told WWD, “Their avant-garde spirit and the quality of their creations give this fragrance house great potential and a promising future.” Speaking to Business of Fashion shortly after the deal was signed, Marc Chaya, the brand’s CEO and co-founder, said: “We thought it would be an amazing opportunity to anchor everything we have done over the past nine years and concentrate on continuing to drive the business with greater experience and greater means. … If there’s a product I can’t do myself because we don’t have the know-how, it means that I can have an idea and LVMH will have the expertise to explore new territories and products. I’m not afraid of being bigger, but I think you need the right people to implement what I am creating.”
DETAILS:
– LVMH purchased a majority share in Maison Francis Kurkdjian.
– The brand’s largest market is the US, and registered retail sales of about $25 million in 2015, up 40 percent versus 2014 according to WWD.
– Chaya is a former partner at Ernst & Young in Paris. He and Kurkdjian will continue at Maison Francis Kurkdjian in their current roles of CEO and creative director, respectively.
– Both Chaya and Kurkdjian will also remain shareholders in the company.
– Financial terms of the deal were not disclosed.
BEAUTYCON RAISES $9 MILLION IN A SERIES
WHO: Founded in 2011 by Moj Mahdara, Beautycon began as a Los Angeles event planner that booked and coordinated conferences linking YouTube stars, their audience, and the brands that want to market to them. Targeting young women between the ages of 18 and 25, Beautycon estimated that the demographic represents $4 billion a year in spending on cosmetics, another $5.7 billion on apparel and accessories, and $8.2 billion on computers and electronics. They have since expanded the festivals to NYC and London, launched a beauty box, and created branded merchandise.
WHY: The new funding will fuel the expansion of the company’s media footprint. Part of the money is earmarked to hire a new head of content so that Beautycon can not only harness a generation of new media influencers, but also have a more active hand in creating them. In addition to new content, Beautycon is also making a huge push into data and analytics.
IN THEIR OWN WORDS: “The conferences are now officially festivals,” says Mahdara. And now it’s time for the company to expand its footprint. Mahdara has set up a small shop for Beautycon swag, but sees opportunities to sell its own brands of cosmetics and (potentially) other apparel. Nancy Dubuc, president and CEO, A+E Networks, told TechCrunch, “Beautycon has done an incredible job growing and evolving their business into a major player, not only in the experiential marketplace, but also the digital content and e-commerce businesses. Moj has created a global movement for beauty and fashion enthusiasts. We are thrilled to partner with Beautycon, and look forward to exploring a number of synergies particularly with our Lifetime brand.”
DETAILS:
– This $9 million in Series A funding brings the total amount of capital raised to $11 million in 2 rounds from 24 investors.
– The money in this round is coming from an assortment of new strategic investors and pedigreed family offices, including A+E Networks and Main Street Advisors. Previous investors include YouTube celebrity Bethany Mota, CAA, BBG Ventures (AOL’s venture fund), Hearst Media, and Jay Brown.
– According to Crunchbase, a $2 million seed round in March 2014 was led by Hearst Corporation and included 19 other investors.
– Estimated revenue according to Owler is $4 million.
– In its fourth year, Beautycon LA had its largest turnout to date with over 15,000 attendees, almost doubling in size from 8,000 in 2015.
FUNCTION OF BEAUTY SECURES A $9.5 MILLION SERIES A
WHO: The Function of Beauty launched in December of 2015 with the simple mission of creating hair products that are built exclusively for a single person’s hair. The consumer enters their hair type, picks a fragrance, and chooses 5 goals. The results are put in a proprietary algorithm that works out which ingredients, and how much of those ingredients, should be used in shampoo and conditioner for each individual user. The company claims the algorithm offers up to 12 billion custom combinations.
WHY: The company will use the new cash to continue refining the brand and product, as well as planning for international expansion and opening a flagship store in NYC.
IN THEIR OWN WORDS: Founder Zahir Dossa told TechCrunch that the company’s pop-up shop in NYC was successful in growing brand awareness. On the heels of that, Function of Beauty is looking to show consumers just how the system works, letting them take the hair quiz and watch the machinery fill the order right before their eyes.
DETAILS:
– Function of Beauty raised $9.5 million in a Series A round led by venture capital firm GGV Capital.
– This brings Function of Beauty’s total funding amount to $12 million.
– Other investors include Y Combinator, a seed-round investor, and newcomers Bessemer
Venture Partners and SoGal Ventures.
– Hans Tung, GGV’s managing partner, has become a “board observer” at Function of Beauty.
– This round brings Function of Beauty’s total funding amount to $12 million.
PUIG ACQUIRES MAJORITY STAKE IN APIVITA
WHO: Apivita was founded in 1972 by Niki and Nikos Koutsianas in a pharmacy in Athens, which continues to be its main distribution channel today. The brand produces products whose formulations are based on propolis, honey, royal jelly, beeswax, plant extracts, and essential oils. The products are inspired by bee culture, nature in Greece, and the holistic approach to health, beauty, and well-being. The company’s distribution is comprised of branded shops, pharmacies, and department stores.
Exea is the owner of Puig, the Barcelona-based, family-run company that owns brands such as Jean Paul Gaultier, Carolina Herrera, and Nina Ricci, and also has licensed fragrance labels like Prada, Valentino and Comme des Garçons. Exea also owns Uriage, the Flamagás brand of lighters, and has a 50 percent stake in Isdin, a beauty label held jointly with the Esteve family through Laboratorios Esteve.
WHY: According to Exea, Apivita fits perfectly with their diversification strategy.
DETAILS:
– The company posts annual sales of about 40 million euros, or $42.3 million.
– According to WWD, Hervé Lesieur, the executive who invested with Exea in Laboratoires Dermatologues d’Uriage in 2011 and serves as president and chief executive officer of that dermocosmetics brand, is also taking a minority stake in Apivita.
– According to Spanish newspaper El Periódico, Exea will take control of the business while Apivita founder and chief executive Nikos Koutsianas will be the new chairman.
– The Koutsianas family will retain a 33.3% stake in the company.
– Apivita will keep its base and production line in Greece.
SKIN INC RECEIVES STRATEGIC INVESTMENT
WHO: Founded by Sabrina Tan in 2008, Skin Inc was created as a simple regime based on suiting individuals’ specific skincare needs through a custom-blended serum called My Daily Dose. An online quiz of about two dozen questions and an algorithm recommend three out of nine targeted serums to address a consumer’s unique needs. Through a strong partnership with Sephora, Skin Inc’s global footprint includes 100 cities globally with over 350 distribution outlets across Asia, Europe, America, and online.
Spackman Entertainment Group Limited, together with its subsidiaries, is a leading entertainment production company that is primarily engaged in the independent development, production, presentation, and financing of theatrical motion pictures in Korea.
Spackman Media Group Limited, a company incorporated in Hong Kong, together with its subsidiaries, is collectively the largest entertainment talent agency in Korea in terms of the number of artists under management.
WHY: The investment will fuel the Skin Inc trajectory for growth and footprint expansion in key skincare markets. Spackman Media Group provides access to a branded entertainment platform and access to SMG’s artists.
IN THEIR OWN WORDS: In a press release Sabrina Tan, founder and CEO, Skin Inc, says, “Skin Inc’s focus on brand globalization has naturally led us to explore opportunities in Korea, the nerve-centre for all things related to innovation, beauty and entertainment. Skin Inc Global is a skincare brand that has embodied technology, digitalization and personalization since its inception. With personalization at the heart of our business, the company is well-placed to capture the attention of the fickle millennial audience, and expand at pace in a country known for its technological innovations and strong beauty culture.”
DETAILS:
– Terms of the investment were not released.
SKINSCIPAC ACQUIRES PRIORI SKINCARE
WHO: Priori is a science-driven, anti-aging skincare line founded by Joe Lewis and Joe DiNardo in 2005. The brands consists of 21 products priced between $34 and $110. Distribution of the products is primarily in the professional channel through about 15 distributors, with very limited retail distribution and international distribution.
SkinSciPac is a newly formed holding company formed by a group of beauty industry veterans.
WHY: SkinSciPac’s intentions are to create a portfolio of brands grounded in science with professional credibility. Priori fits that bill.
IN THEIR OWN WORDS: Dan Ginsberg, chairman of SkinSciPac told WWD, “This is a brand that hasn’t had as much tender loving care in the last couple of years as it could. Operating properly and being attentive to the brand and its current customer base…[of] professional customers, and our distributors, will help us…but we now will choose to be more assertive in expanding distribution. That includes adding more retail distribution as well as direct-to-consumer.”
DETAILS:
– According to WWD, industry sources estimated Priori had $7 million in revenues for 2016 and a plan for growth with sales for 2017 potentially hitting $15 million.
– Terms of the SkinSciPac acquisition were not disclosed.
HENKEL ACQUIRES NATTURA LABORATORIES
WHO: Founded in 1982, Nattura Laboratorios’ main brands are Pravana and Tec Italy, primarily serving the professional hair care segment.
Founded in 1876, Henkel operates worldwide with leading innovations, brands, and technologies in three business areas: laundry and home care, adhesive technologies, and beauty.
WHY: The acquisition of this company will help Henkel strengthen its hair professional business and provide a platform for further growth in the Latin American market.
IN THEIR OWN WORDS: Hans Van Bylen, CEO of Henkel, stated in the company press release, “This acquisition is part of our strategy to strengthen our position in attractive markets and categories. We will expand our Hair Professional business in Mexico and further leverage our brand portfolio in the US hair professional market.”
DETAILS:
– Nattura Laboratorios generated sales of more than €100 million in 2016.
– The financial details have not been released.
DRUNK ELEPHANT SECURES ROUND OF FUNDING
WHO: Houston-based Drunk Elephant launched in 2013 as a tightly edited range of efficacious “clean” formulations and Instagram-friendly packaging. Today it’s one of the fastest-growing lines in Sephora.
WHY: The new investment will fund international expansion and the infrastructure to scale the brand. There are two more products that will launch this year, with three more already completed and set to launch in 2018.
IN THEIR OWN WORDS: In an exclusive interview, Masterson told WWD, “It’s a new chapter. It’s a new level. We’re just going to go into a new phase with big changes and exciting stuff on the horizon. The company is still a majority family-owned company…. [We] eliminated the strategics [companies as potential investors] right off the bat — not forever, but for now. The company is too young. We have more to do and I’m not ready to sell the company.” “I found Tiffany’s message of clean clinical as something that resonated for me. It’s refreshing, compelling, and simple,” said Robin Tsai, principal at VMG Partners, noting that although the team has been actively looking in the beauty category for some time, the firm’s investments in the past “haven’t been exactly analogous.” Among them: Kind Inc., Babyganics, and nut butter company Justin’s, the latter two acquired last year by S.C. Johnson and Hormel, respectively.
DETAILS:
– Tiffany Masterson, founder of Drunk Elephant, and Robin Tsai, principal at VMG, both declined to comment on specifics surrounding the deal but confirmed that paperwork was signed March 1.
– Leandra Medine reached out to Masterson’s publicist six months ago and expressed interest in getting involved with the brand—as an investor, not as an influencer.
– Financo, Drunk Elephant’s banker, advised on the deal.
– According to WWD, an industry source with knowledge of Drunk Elephant’s business said the brand did sales of between $25 million and $30 million at retail last year, with revenues on track to double in 2017 following the addition of markets such as Canada and Australia.
– Last fall, a spokeswoman for Sephora confirmed that Drunk Elephant is one of the fastest-growing skincare companies in the retailer’s history.
SHISEIDO ACQUIRES CREATIVE AGENCY JWALK
WHO: JWALK, founded in 2010, is a full-service agency that disrupts existing expectations by merging innovative creative with an intrinsic business expertise. The agency has a long-standing relationship with Shiseido, having worked with the company for the last four years, particularly on the company’s bareMinerals and Buxom brands.
Shiseido was founded in 1872 as the first Western-style pharmacy in Japan. The business gradually evolved into a cosmetics company, offering people the most advanced technology and the finest aesthetics available in the East or the West. Now known globally as the premier cosmetics company with roots in Japan, the name Shiseido has come to represent the world’s highest standards of quality. Fiercely contemporary and innovative after over 140 years in business, Shiseido group brands are now sold in over 120 countries and regions.
WHY: According to the press release, JWALK will work as an integrated part of the Shiseido Americas organization, working hand-in-hand with Shiseido’s brand teams, playing a role in the entire creative process, from strategy to execution, and from concept to delivery. JWALK will provide innovative ideas, digital savviness, and creative support to help strengthen each brand’s creative consistency across all consumer touchpoints. Doug Jacob, one of JWALK’s co-founders, told WWD, “The big advantage is the alignment of values … Either you do it for the money, or you do it because it’s passion. My business partner and I had the luxury of not needing to sell the business. We are truly doing it because the exercise ahead of us is going to be an incredible case study. It hasn’t really been done like this.”
IN THEIR OWN WORDS: Marc Rey, president and CEO of the New York-based Shiseido Americas Corp., which made the deal, stressed the importance of creativity in the new digitally driven beauty business. “We work in an industry where rational and emotional communication to the consumer needs to be combined,” he said. “We are not selling detergent. We are selling prestige beauty.” Masahiko Uotani, President and CEO of Shiseido Group, said. “Creative excellence is at the core of consumer communication and is key to building the value of our prestige brands. I am convinced that JWALK will add significant intangible value and capabilities to our marketing efforts, especially in leveraging their digital communication expertise. I also look forward to JWALK’s collaboration with our creative teams in Tokyo on key projects to deliver creative excellence on a global scale.”
DETAILS:
– Financial terms of the acquisition were not disclosed.
– JWALK will continue working with companies in categories outside of Shiseido’s circle of competition.
Doug Jacob, cofounder of JWALK, will have the title of creative director, Shiseido Americas. He will report to Jill Scalamandre, president of Shiseido’s Global Makeup Center of Excellence.
MADISON REED RAISES $13 MILLION
WHO: Madison Reed was founded in 2013 by Amy Errett, a former Maveron partner and a current special adviser to True Ventures. She told WSJ that she left venture investing behind when she realized how hair dyes sold at groceries and pharmacies failed to satisfy demand in a massive US market. Madison Reed is disrupting the $50 billion hair care industry by using technology in creative ways to make the at-home hair color experience a more luxurious, fearless, happy process. The direct-to-consumer line has quickly become recognized as a category leader thanks to a nutrient-rich hair color formula crafted without ammonia, parabens, resorcinol, PPD, phthalates, and gluten—the irritating chemicals typically found in hair color. The brand started as a direct-to-consumer e-commerce player garnering attention for its simple-to-use hair color quiz and mobile app. Last year saw expansion on QVC and in Sephora, but 90% of the company’s sales are still direct-to-consumer, and the company expects to keep it that way.
WHY: To fuel growth.
DETAILS:
– Madison Reed raises $13 million.
– Investors in the round were undisclosed.
– Madison Reed is a privately held company backed by top-tier venture capital firms Norwest Venture Partners, True Ventures, and Maveron.
– According to Crunchbase, the company has raised $45.1MM in 4 rounds from 6 investors.
– April 2013, the company raised $4 million/ Series A.
– January 2014, they raised $12 million / Series B.
– September 2015 the company raised $16.1 million / Series C.
YES TO GETS $8 MILLION CASH INFUSION
WHO: Based in Pasadena, California, Yes To, founded by Ido Leffler and Lance Kalish in 2007, has grown to be a global leader in natural beauty with products made with fruits and vegetables. Yes To develops innovative, natural, fun, and efficacious beauty and personal care products that are free of all the “nasties” and filled with all the “goodies.” The company’s natural, paraben-free products span multiple categories including facial care, body care, hair care, and lip care and can be found in over 20,000 stores globally.
WHY: Yes To’s widespread brand appeal, resonance with consumers, and highly efficacious products have positioned the company for continued rapid growth at the forefront of the natural beauty industry. The line of credit is part of an accelerated growth strategy.
IN THEIR OWN WORDS: “Yes To has reemerged as an innovative leader in the fast-growing natural beauty space,” said David Mannix, Partner at San Francisco Equity Partners. “We chose Avidbank as a lending partner for Yes To because we knew they would move quickly and would be able to scale with the company.” “The credit facility provided to Yes To reflects our continued commitment to build market share in the asset-based lending arena,” said Larry LaCroix, Executive Vice President and Division Manager of Avidbank Specialty Finance. “Moreover, our ongoing relationship with San Francisco Equity Partners has benefited a number of new portfolio companies, as well as broadened Avidbank’s reach into new markets.”
DETAILS:
– The funds are available to Yes To in the form of an asset-based line of credit from Avidbank Specialty Finance.
San Francisco Equity Partners invested in Yes To and helped facilitate the deal.
SHISEIDO ACQUIRES MATCHCo
WHO: MATCHCo was launched in January 2013 by founders Andy Howell and Dave Gross, who share a background in launching customization programs for companies like Nike, Reebok, and Zazzle. MATCHCo is an app that turns the iPhone video camera into a colorimeter to determine a customer’s skin tone. The technology blends the perfect color within minutes from its Santa Monica fulfillment center and a bottle of foundation arrives in the mail within 24 to 48 hours. The app is free and a 1-oz. bottle of foundation is $49. Gross told FastCo, “We’ve essentially built a search engine for makeup with a self-improving algorithm. We have now collected what we think is the largest database of skin colors. The company relies on high-tech innovation, but at its core the philosophy of the company is that of bespoke luxury goods, created one consumer at a time to their unique specifications.”
Shiseido was founded in 1872 as the first Western-style pharmacy in Japan. The business gradually evolved into a cosmetics company, offering people the most advanced technology and the finest aesthetics available in the East or the West. Now known globally as the premier cosmetics company with roots in Japan, the name Shiseido has come to represent the world’s highest standards of quality. Fiercely contemporary and innovative after over 140 years in business, Shiseido group brands are now sold in over 120 countries and regions.
WHY: The synergy of MATCHCo’s innovative digital tools and Shiseido Group’s R&D capabilities will help to enhance a business model that captures a major consumer trend: cosmetics customization. Combined efforts of MATCHCo and Shiseido Group will result in a rollout and enhancement of a business model that quickly responds to changes in consumer needs and the rapidly growing market. Shiseido intends to “leverage” the MATCHCo technology across Shiseido’s other brands, which could give them a competitive edge at customization and personalization.
IN THEIR OWN WORDS: “We are thrilled to welcome MATCHCo, a company possessing innovative digital technologies, into our Group. Creating innovations is an area of special strategic focus for Shiseido Group, and we look forward to offering more unique value to consumers around the world. This will now be made possible through accelerated innovation in rapidly evolving digital tools and customized products.”
DETAILS:
– The sales volume of MATCHCo and purchase price were not released; however, according to WWD, a number of industry sources estimate the annual volume is less that $5 million.
– MATCHCo will remain based in California, with its engineering team in Palo Alto and its marketing and operations hub in Santa Monica, and will become part of Shiseido’s Global Makeup Center of Excellence, led by Jill Scalamandre and based in New York.
– MATCHCo investors reflect the intersection of tech and beauty, including former Kiehl’s president Jami Morse Heidegger, Clarisonic president Jack Gallagher, and Silicon Valley investor George “Skip” Battle of Netflix and LinkedIn.
L CATTERTON INVESTS IN KOPARI BEAUTY
WHO: The brainchild of chef Kiana Cabell, Suja juice co-founder James Brennan, and beauty experts Bryce and Gigi Goldman, Kopari launched in late 2015 as a direct-to-consumer brand. The 100% organic coconut oil-based beauty brand has an existing seven-product lineup. The brand integrates cutting-edge chemistry and superior natural ingredients to enhance the benefits of coconut oil and provide multipurpose formulations that deliver effective results. All products are specifically formulated to use the natural benefits of coconut oil. The products are free from sulfates, silicones, parabens, GMOs, and other harmful ingredients. Experiencing exceptional growth online harnessing digital and social platforms, the business has expanded to more traditional channels like QVC and Sephora. Coconut Melt is the company’s bestseller, while Body Glow and Sheer Oil are close seconds, according to the brand.
L Catterton, formed in 2016 through the partnership of Catterton, LVMH, and Groupe Arnault, is the largest consumer-focused private equity firm in the world.
WHY: The investment is earmarked to fuel growth in the US, international expansion, R&D, and product innovation. The brand launched with Sephora online in October 2016 and is expanding to brick-and-mortar. This growth capital will also be used to support this partnership through marketing and inventory.
IN THEIR OWN WORDS: “This significant investment from L Catterton demonstrates the strong positioning and high performance of our brand,” said Kopari CEO Bryce Goldman. “The investment will allow Kopari to continue our rapid growth and expansion, providing people worldwide with the benefits of coconut oil and cutting edge, multi-purpose formulations that deliver effective results in the safest and most natural way possible. We will be able to accelerate our development of conscious skincare products that are as safe for our skin as they are for the planet. With L Catterton’s support, Kopari will have the resources, industry knowledge, and global expertise that we need to take our brand to the next level.”
DETAILS:
– L Catterton along with celebrities Karlie Kloss, Shay Mitchell, Hilary Duff, Mila Kunis, and Ashton Kutcher have paticipated in this round of funding.
– According to the LA Times, industry sources estimated the brand had sales of about $5 million for 2016.
– The exact investment was not shared but was said to be significant.
– Terms of the transaction were not disclosed.
SEVENTURE PARTNERS INVESTS IN SKINJAY
WHO: Founded in 2012 by Nicolas Pasquier, Skinjay creates easy-to-use in-shower micronebulization devices to deliver essential oils to the skin and into the lungs. The product combines a mixer that affixes to a flexible shower cord, and essential oil capsules. The essential oils vaporize alongside the warm water, giving the user a relaxing shower experience and complementing skin and respiratory tract microbiomes.
Seventure is a subsidiary of Natixis Global Asset Management. Natixis is the corporate investment management and financial services arm of Groupe BPCE, the second-largest French bank. With over €600 million in assets under management as of the end of 2015, Seventure Partners is a leading venture capital firm in Europe. Since 1997, Seventure Partners has invested in innovative businesses with high-growth potential in digital technologies in France and Germany, and in the life sciences field across Europe and North America.
WHY: The funds raised will be used to accelerate the company’s international expansion and bolster R&D, particularly within respiratory microbiome research.
IN THEIR OWN WORDS: According to PE Hub, Isabelle de Cremoux, CEO and Managing Partner of Seventure Partners, said, “Skinjay’s disruptive and visionary approach to microbiome and wellbeing was very attractive to us. We have always aimed to support innovative-high growth entrepreneurial companies, with a keen interest in the microbiome. Skinjay is already commercially successful and Nicolas has far-reaching managerial experience, as well as the passion and experience to drive the Company forward.”
DETAILS:
– Seventure Partners invested €3.5 million in Skinjay from its Health for Life Capital investment vehicle.
RUSH HAIR SELLS MINORITY STAKE TO LDC
WHO: Rush Hair is a UK-based family-run salon business launched 22 years ago by Andy Phouli and Stell Andrew as a single salon in Wimbledon. Their salons are heavily concentrated in London and the South East, but a recent regional expansion has led to openings in Birmingham, Liverpool, Nottingham, York, Manchester, and Bristol.
LDC is the private equity arm of Lloyds Banking Group. Established in 1981, LDC is a leading player in the UK private equity mid-market and supports management buyouts, institutional buyouts, and development capital (replacement, expansion, and acquisition) transactions.
WHY: The investment is earmarked to support a rollout in the UK with the goal of transforming Rush Hair into a “major national brand.”
IN THEIR WORDS: Stell Andrew, joint CEO and co-founder of Rush, said: “Until now we have grown our business organically but felt the time was right to turbo-charge our expansion plans, which is why private equity investment is a natural next step for us. We are now in a position to substantially increase our national presence and bring the Rush brand to more customers across the country.” LDC Investment Director Alastair Weinel said: “Rush has a proven, scalable model. Its strong brand proposition means the business [is] in an ideal position to push on and grow its UK footprint. The development of its training academy and continued innovation will further support the business’ status as the market-leading player in the hair and beauty sector.”
DETAILS:
– Rush Hair sold a minority stake to private equity firm LDC for approximately £16 million.
– Rush has revenue of £36 million and 85 salons across the UK.
– LDC aims to help Rush almost double its salon count over the next four years, will develop Shop Rush, an e-commerce platform, and plans to open a training academy in London’s Covent Garden this year.
– LDC investment directors Alastair Weinel and Tanya Thompson will join the company’s board.
– LDC was advised by Shoosmiths, Spectrum Corporate Finance, KMPG, Pragma Consulting, Catalysis, and JLT. Rush’s management team was advised by Deloitte and Osborne Clarke.
WESTROCK SELLS OFF HEALTH AND BEAUTY BUSINESS FOR $1.025 BILLION
WHO: WestRock was created in 2015 by the merger of two paper and packaging giants: Richmond, VA-based MeadWestvaco Corp. and Norcross, GA-based RockTenn Co. The company has maintained its headquarters office in downtown Richmond, but it essentially operates joint headquarters now in Richmond and Norcross, with the company’s CEO and some other key administrators based in Georgia. WestRock’s home, health, and beauty business has 13 manufacturing plants in North America, Europe, South America, and Asia.
Silgan Holdings Inc. is a Stamford, CT-based packaging company. With annual sales of about $3.6 billion, Silgan has 87 plants and 9,600 employees worldwide.
WHY: WestRock has been looking to shed non-core business units. The acquisition would allow Silgan to expand its presence in the packaging closure market to encompass home, health, beauty, food, beverage, and garden products.
IN THEIR OWN WORDS: CEO of WestRock, Steve Voorhees, said, “We have a constant strategic focus at WestRock on aligning our portfolio and resources around our core paper and packaging solutions businesses, and the sale of our Home, Health and Beauty business is the next step in this process. Over the past year, we have made several investments that have further enhanced our business portfolio, while exiting others that were not core to our goal of being a premier provider of paper and packaging solutions to our customers.” Tony Allott, Silgan’s president and chief executive officer, said in a statement to Premium Beauty News, “This acquisition significantly enhances the scope and breadth of our market-leading closure franchise by bringing new capabilities in the highly engineered dispensing systems category,”
DETAILS:
– The WestRock business acquired by Silgan is a global supplier of products that include triggers, pumps, and sprayers.
– WestRock Co. has a deal to sell its home, health, and beauty business to Silgan Holdings Inc. for $1.025 billion, plus the assumption of $25 million in foreign pension liability.
– WestRock predicts that it will receive around $1 billion net after-tax proceeds from the divestiture.
– The business generated sales of about $566 million in the 12-month period that ended Sept. 30.
– Silgan expects the deal to add to earnings, and will add more to earnings over time as synergies, which are expected to be $15 million within 24 months, are phased in.
– WestRock’s stock has soared 53% over the past 12 months, while Silgan shares have tacked on 3.3% and the S&P 500 has gained 19%.
– Silgan expects to realize about $15 million worth of efficiencies within two years of the acquisition. Those will be achieved “primarily through reductions in general and administrative expenses, procurement savings and manufacturing efficiencies,” the company said.
– Lazard served as the lead financial advisor to WestRock for this transaction, and Wells Fargo Securities was also a financial advisor to the company.
CHURCH & DWIGHT BUYS VIVISCAL
WHO: Viviscal makes hair growth vitamins and products for men and women that are sold in more than 30,000 locations globally with 25,000 points of distribution in the US. The company also offers replenishment services, where members of Viviscal Elite receive automatic supplement shipments every 90 days for $39.99. The company’s products target hair loss, aiming to nourish both the hair and scalp. Viviscal includes a proprietary AminoMar marine complex blended with other nutrients that aims to promote hair growth.
Church & Dwight owns brands like Arm & Hammer, Batiste dry shampoo, First Response pregnancy tests, L’il Critters vitamins, Nair Hair Remover, Orajel, Oxiclean, Trojan, VitaFusion, and Xtra.
WHY: Church & Dwight is taking a bet that beauty supplements are more then a trend and have the opportunity for growth.
IN THEIR OWN WORDS: James Murphy told WWD, “We are enormously proud of our achievement in building Viviscal into a hugely successful global brand that has enjoyed meteoric growth. We are however delighted that Church & Dwight, a highly regarded and fast growing US consumers business, will lead the brand in its next phase of development.”
DETAILS:
– Church & Dwight acquired Viviscal for 150 million euros, about $160 million.
– Founder James Murphy owned a 90% stake and and Lifes2Good, Viviscal’s parent nutraceutical business owns the remaining 10 percent.
– Viviscal is 90 per cent owned by Mr Murphy, according to company records, with the remaining 10 per cent owned by the holding company of Lifes2Good. The holding company is backed by investors including BDO Development Capital Fund, which invested €5 million into the business in 2015.
– IRI data for the 12-week period prior to the sale suggest that Viviscal has had about $8.5 million in tracked sales in multi-unit doors.
– Investment bank Michel Dyens advised on the deal.
MODERE ACQUIRE JUSURU INTERNATIONAL
WHO: Jusuru International is the company that created Liquid BioCell, a new generation of nutraceuticals for healthy aging, active joints, and younger-looking skin. Liquid Biocell is backed by multiple clinical studies and holds seven US and international patents. It is formulated with the company’s Collagen/HA Matrix Technology.
Modere describes itself as “the first social retailer to create a safe and forward-thinking approach to overall wellness.” The online retailer sells products for health, wellness, beauty, personal care, and household care, which are distributed through its innovative Social Retail model. The retailer is a part of Z Capital Partners’ portfolio, an asset management firm.
WHY: The acquisition will further expand the Modere position to meet their global goal of 10 million healthy homes by 2020.
IN THEIR OWN WORDS: Robert S. Conlee, Modere’s CEO, comments in the press release, “Both companies have a shared mission and commitment to developing safe and effective products, and Jusuru’s customer-based direct sales philosophy aligns with Modere’s new Social Retail model, providing an income opportunity for everyday entrepreneurs while benefiting our customers worldwide.”
DETAILS:
– Jusuru will become the new Modere Collagen Sciences division, and will be led by Jusuru’s co-founder and President Asma Ishaq.
ADDITIONAL TRANSACTIONS
LVMH has consolidated its position in Russia by acquiring a 100% stake in Ile de Beauté, one of Russia’s leading cosmetics chains from founder Igor Denisov. The retail business has been run in the form of a joint venture with LVMH owning a 65% stake in the company. The network currently has 140 stores across the country, including an online portal that delivers cosmetics to any point in Russia.
e.l.f. Beauty, Inc., which launched its IPO last year, has commenced a proposed secondary public offering of 7,000,000 shares of common stock, which will be offered and sold by stockholders of e.l.f. Revenue forecasts for 2017 are $285 million to $295 million.
Amazon acquires Souq.com, the largest e-commerce platform in the Middle East, for an undisclosed figure. The price of the transaction has not been disclosed, but according to Cosmetic Business some reports have suggested Amazon is paying about $650 million for the company.
Douglas owned by CVC CapitalPartners acquires Spanish retailer Bodybell. The German retailer will acquire more than 200 stores, two e-stores, and the logistics platform of the Spanish competitor. Douglas has a footprint of 1,700 stores in 19 European countries and is the market leader for selective beauty in Europe. In 2015/2016, Douglas generated roughly €2.7 billion in annual sales.
FlexyBeauty, a France-based SaaS solution for salons and spas, has raised €1.5 million euros. The investment came from Newfund, a VC fund based in Paris. FlexyBeauty is an all-in-one, simple digital solution, which unites connected cash register software, a web site and a mobile application, including a boutique, plus online reservation and payment capabilities. Complementary services include geolocalized promotions and optimization of peak work periods.
Multi Packaging Solutions International has signed a letter of intent to acquire Paris Art Label Company, Inc. The business makes labels and shrink sleeve products to the branded consumer marketplace in the US with manufacturing facilities on Long Island, NY, in both Patchogue and Ronkonkoma. The acquisition fits perfectly with MPS’s previously announced strategy to expand its capabilities and presence in the label sector globally.
The Infopro Digital group, which organizes the Luxe Pack tradeshows in Monaco, New York, and Shanghai, has announced the acquisition of Beauteam, the company behind the MakeUp in Paris, MakeUp in New York, MakeUp in Asia, MakeUp in São Paulo and MakeUp in Los Angeles trade shows.
US scent marketing company ScentAir acquires UK rival Brandaroma. Both companies created customized scent strategies for retailers, hotels, and casinos. The transaction is being financially supported by ScentAir equity sponsor and private equity firm Parthenon Capital Partners.
Trian Fund Management invested $3.5 billion in P&G. They are expected to deliver a white paper to P&G soon, putting the pressure on to continue streamlining and reducing costs. P&G told Reuters it “welcomed all investment” in the company, and benefited from a 3% spike in shares shortly after the news of Trian’s investment broke.
Specialty chemical maker Elementis paid $360 million to acquire SummitReheis, a supplier of specialty additives in the antiperspirant and personal care market. The bolt-on acquisition will allow Elements to expand its client base with more geographies and products.
Azelis Americas acquires distributor Ross Organic. Azelis Americas is a specialty chemical distributor and part of the Azeris group. Their hopes are to expand their US footprint through the acquisition of Ross Organic, an ingredients distributor. Frank Bergonzi, CEO and President of Azelis Americas, said: “This acquisition affords us the extended reach and history of sustainable organic growth in a strategically important market segment.”
Evonik acquires chemical unit firm Air Products in a $3.8 billion deal. This acquisition provides a foundation for improving formulations, delivery of actives, and an expansion into hairstyling for Evonik. According to Bloomberg, Evonik Chief Executive Officer Klaus Engel is making the company’s biggest acquisition, gaining curing agents and plastic additives that generate profit margins of more than 23 percent.
Autumn Harp received a round of funding from The Vermont Economic Development Authority to fund the expansion of their manufacturing facility as well as new machinery and equipment to keep pace with operational demand. The assistance comes in the form of tax-exempt industrial bonds.
