Coty Inc has submitted a binding offer to Chanel to acquire its Bourjois cosmetics brand for 15 million Class A Coty shares, worth approximately US$239m, in response to which Chanel has agreed to enter into exclusive negotiations.
Founded in 1863 by French actor Joseph-Albert Ponsin, who developed a line of colour cosmetics for his fellow actors, the Bourjois brand is today sold through approximately 23,000 points of sale in more than 50 countries around the world.
"We are looking forward to having the Bourjois brand as part of our portfolio of leading beauty products, as well as welcoming Chanel as a Coty shareholder,” said Bart Becht, Chairman and Interim CEO of Coty Inc. “Bourjois’ brands are highly complementary to Coty’s existing colour cosmetics portfolio. Additionally, the company’s strong heritage, quality image and leadership positions in a number of western European countries where Coty is seeking to bolster its presence, provide a great opportunity for Coty to further strengthen its leadership position in the large and growing colour cosmetics category.”
“We are excited about the potential opportunities that joining with Coty could present for Bourjois,” said Michael Rena, Chanel's representative. “Coty and Bourjois share a passion for colour cosmetics and together they would have strong potential to further advance their leadership in this attractive global category. We intend to examine the offer in more detail and enter constructive talks with Coty.”
The proposal is subject to customary closing conditions, including regulatory clearances.
Commenting on the deal, Ildiko Szalai, Senior Analyst, Beauty and Personal Care Research at Euromonitor Internaitonal, said: “The purchase of Bourjois falls in line with Coty’s core strategy of high speed expansion through acquisitions and the integration of the brand adds a percentage point market value share to Coty’s Colour Cosmetics portfolio. The brand also registers global level sales in mass deodorants and fragrances in 2013. However, the deal does not offer strong expansion into dynamic emerging markets or skin care categories. Over 55% of the brand’s sales is generated in western Europe, where colour cosmetics category has a bleak outlook with less than 1% CAGR over the 2013-18 period. Although a growing proportion of the brand’s sales is generated in the Middle East and Africa, the most attractive region for colour cosmetics up to 2018. Coty could build good operational synergies for Bourjois with its Rimmel and Astor brands to aid further geographic expansion and benefit from larger scale of economies in mass colour cosmetics.”
