L’Oreal to Expand Market Share Through Acquisition of Three Skincare Brands

L’Oreal agrees to acquire three skincare brands from Valeant Pharmaceuticals Inc., increasing the company’s US cosmetic & beauty product manufacturing revenue to $3.7 billion in 2017.

Canada-based Valeant Pharmaceuticals Inc. agreed to sell three of its skincare brands to French cosmetics manufacturer L’Oreal for $1.3 billion. The acquisition, which will include Valeant’s CeraVe, AcneFree and Ambi brands, will expand L’Oreal’s US cosmetic and beauty product manufacturing revenue to an estimated $3.7 billion. This will increase L’Oreal’s share of the $41.4 billion Cosmetic & Beauty Product Manufacturing industry to an expected 8.8%, up from 8.4% prior to the acquisition. L’Oreal estimates that the three brands have a combined annualized revenue of about $168.0 million.

According to IBISWorld Industry Analyst Anya Cohen, “The skincare market is one of the fastest growing product segments in the Cosmetic & Beauty Product Manufacturing industry, with 28.9% of the industry’s total revenue sourced from the product line. A focus on antiaging treatments has boosted this segment’s visibility in the past five years, and consumer concerns about appearance, coupled with advances in technology, have paved the way for this segment’s ascent. At the same time, men’s skin care products have become a significant product category within the industry, as men have increased their spending on facial skin care products in the past five years.”

As a result of booming demand, acquisitions of skincare brands and companies have been rampant in recent years; for example, Unilever purchased four skincare brands in 2015, including Dermalogica and Murad, and Estee Lauder acquired several skincare brands, including GLAMGLOW, in 2016. L’Oreal has also made skincare acquisitions in recent years, including IT Cosmetics for $1.2 billion in July 2016.

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