The billionaire owner of L’Occitane International is close to making a buyout proposal to take the French skincare firm private as early as Monday. This L’Occitane buyout deal could value it at about $7 billion including debt, as per a report. This was reported by the people asking not to be identified because the deliberations are private.
Billionaire Geiger Reinold is considering making an offer for the L’Occitane shares other than what he owns at HK$33 to HK$34 apiece as early as Monday. Blackstone Inc.’s tactical opportunities fund is poised to provide financing for the buyout deal, along with Goldman Sachs Group Inc.’s asset management arm, the people said.
L’Occitane buyout deal
An offer to buyout may give L’Occitane an enterprise valuation of about €6.5 billion ($7 billion), as per the people familiar with the source. Blackstone and Goldman Sachs Asset Management may provide about €1.6 billion in total funding, the people said.
L’Occitane ultimately controlled by Reinold Geiger, the chairman, who already owns more than 70% of the company, as per the exchange filings. Trading of L’Occitane was suspended in Hong Kong on April 9, pending an announcement related to takeover codes.
Geiger was close to a deal to take the skin-care company private with funding help from Blackstone, potentially ending its 14-year run on Hong Kong’s stock exchange, Bloomberg News reported earlier this month.
Talks are ongoing, no final decisions have been made and details such as price and timing could still change, the people said.
A representative for L’Occitane didn’t immediately respond to a request for comment. Blackstone and Goldman Sachs declined to comment.
Interested investors in L’Occitane
Blackstone, the world’s largest alternative asset manager, counts tactical opportunities as a platform to make investments and provide opportunistic capital that other traditional strategies won’t pursue, according to its website. The tactical opportunities fund has made about 173 investments, including in US-listed Chinese data center firm Vnet Group Inc., and counted about $35 billion in assets under management as of the end of March.
Goldman Sachs Asset Management focuses on public and private markets investments and advisory services for some of the world’s biggest institutions, financial advisers and individuals, according to its website. It invests across fixed income, liquidity, equity, alternatives and multi-asset solutions.
Reinold Geiger’s L’Occitane
L’Occitane was founded in 1976 by Frenchman Olivier Baussan, who started out making essential oils from plants like lavender in the Provence countryside and selling them at local markets. Geiger became a minority shareholder in 1994, but has said the company’s poor performance prompted him to start working there in a bid to safeguard his investment.
He expanded L’Occitane globally, saying he decided to move into Asia after being impressed by the region’s work ethic. Initially, the strategy went so badly that his auditor warned the poor results could put the whole company in jeopardy. The retailer was listed in Hong Kong in a 2010 IPO and now has eight brands and some 3,000 locations in 90 countries. Yet it earns only about one-third of its revenue in Asia, while the Americas is its fastest growing region.
Challenges for L’Occitane
L’Occitane is facing an increasingly challenging market in China, where global brands such as L’Oreal SA and Estee Lauder Cos. are rolling out frequent discounts to compete for a larger market share. This is also where domestic brands are rising in popularity.
L’Occitane shares update
The L’Occitane shares closed at HK$29.50 on April 8, a day earlier to announcement of takeover. Giving the company a market valuation of about $5.6 billion.
