RELIEF FOR EMBATTLED VALEANT
L’Oreal to buy skincare brands with US reach
L’Oreal says it will acquire the CeraVe, AcneFree and Ambi brands in a cash purchase that would nearly double the US sales of its active cosmetics division
French cosmetics giant L’Oreal has agreed to buy three leading skincare brands from Quebec-based pharmaceutical firm Valeant for $1.3bn in a move set to give its US offering a face-lift.
The acquisition will expand the group’s presence in the US and builds on its purchase of IT Cosmetics for $1.2bn in July.
L’Oreal said on Tuesday that it would acquire the CeraVe, AcneFree and Ambi brands in a cash purchase that would nearly double the US sales of its active cosmetics division, which focuses on aesthetic dermatology.
The acquisition would complement the brand portfolio, president and CEO of L’Oreal USA Frederic Roze said.
"These three brands, built on strong relationships with health professionals and widely distributed … will help us satisfy the growing demand for active skincare at accessible prices,"
The active cosmetics division includes dermocosmetic brands such as La Roche-Posay, Vichy and SkinCeuticals.
AcneFree provides acne treatments and Ambi has products designed for the needs of black consumers.
CeraVe was one of the fastest-growing skincare brands in the US with average growth over the past two years of more than 20%, L’Oreal said.
The acquisition expands the firm’s footprint in the US, where the demand for beauty products is flourishing. In the first nine months of 2016, L’Oreal’s North American sales grew 5.4% compared with just 0.1% in western Europe. Over the years, North America has become L’Oreal’s most important division, accounting for 27% of its overall sales.
The acquisition expands the firm's footprint in the US, where demand for beauty products is flourishing
The sale comes after a difficult year for the Canadian firm, which grew from a small pharmaceutical company to a global giant in the span of a decade mainly due to a growth strategy based on acquisitions.
The former Wall Street darling has come under fire for steep price hikes on drugs and is under investigation in the US over alleged manipulation of accounts, with former senior executives being investigated for fraud.
Its market capitalisation has collapsed from more than $90bn in mid-2015 to $5.2bn.
The embattled drug maker is also struggling to offload a heavy burden of long-term debt, which stood at just over $30bn at the end of the third quarter, with Valeant saying the sale would help it "permanently repay term loan debt".
The move comes a day after the drug maker said it had agreed to sell its Dendreon cancer business to Chinese conglomerate Sanpower for $820m.