Disperse, which is involved in developing dispersion delivery technologies that can enable and enhance the formulation of products such as creams and lotions, will pay up to £9m (€13 m), including cash, shares and potential profit-related payments, for the Warrington-based company.
Disperse's technologies are already used by its customers, which include major US companies such as Estée Lauder and Bath & Body Works, in the manufacture of over 50 branded products with an estimated annual retail value of approximately US$300 million (€244 m).
Elizabeth French was established in 1992 and is an importer and wholesale distributor of a range of branded cosmetics and toiletries, supplying retailers and distributors in the UK and overseas from its premises in the North-West of England. Approximately 20 per cent of Elizabeth French's turnover is derived from outside the UK.
Elizabeth French generated operating profit of approximately £1.1 million on turnover of around £12.9 million in its last completed financial year, ended 30 April 2003. The company's turnover has increased by around a £1 million per year over the past five years, from around £7.6 million in the year ended 30 April 1999.
The design, development and sourcing of appealing products, well produced and packaged, yet value-for-money, is seen by the Directors as key to Elizabeth French's success.
Specifically targeting the pre-teen and teen market niches, with considerable emphasis on product design and marketing, Elizabeth French has created a successful portfolio of value-for-money brands.
Elizabeth French offers entry into teen and twenty-something cosmetics market
"Katie & Friends" is a range of pre-teenage female cosmetics and accessories. The product range is usually presented in bright packaging and is intended to be fun, affordable cosmetics with which young girls can experiment and practise.
The "Lizzie" range is aimed at teenage girls. Like "Katie", the range is usually marketed in bright packaging and is intended to be seen as fun, affordable cosmetics but with a more mature theme and includes products for nails, lips, eyes and face as well as hair products and a limited number of accessories.
Market research indicates that there has been significant growth in the 19-24 year olds market for colour cosmetics (around 43 per cent in the year to June 2002) segments to be targeted.
In capitalise upon this opportunity, in 2004 Elizabeth French launched "VIVO" which offers an appealing range of colour cosmetics which the Directors believe should extend the age range of Elizabeth French's target market and offers the prospect of significant further growth.
The Directors anticipate that the VIVO brand is also likely to present significant line extension opportunities utilising Disperse's existing cosmetic technologies.
Market research shows that 7-16 year olds have £4bn spending power
A recent study by Mintel looking into the 6,000 children's spending habits has shown that they become less inclined to save as they get older.
But while 60 per cent of seven to 10-year-olds questioned said they enjoyed saving money, but less than half of 11 to 16-year-olds felt the same way.
Mintel consumer analyst Jenny Catlin reportedly believes teenagers' attitudes are part of a phenomenon of children "growing older, younger".
The younger children purchased toys/games and snacks, whereas the 11-16 year olds bought fewer games and toys and more snacks.
The older children in the study bought more toiletries, cosmetics, clothes and music.
Cosmetics and toiletries manufacturers have been tapping into this growing market in recent years as the range of products has extended to anti-ageing products at one of the spectrum, to brightly-coloured and packaged cosmetics products at the other.
In addition to the Elizabeth French brands, other brands targetting the pre-teens to early twenties include Mary Kate and Ashley.
Avon's 'mark' brand recently announced a deal with 'lifestyle' outlets, MTV, cinema chains and mobile telephony service providers to promote the line. As reported in a CosmeticsDesign.com article last year, US direct selling cosmetics company Avon introduced the 'mark' brand, which is aimed at 12-24 year old girls and young women.