Shiseido says it has made an all-cash tender offer and second-step merger. The first step of the merger gives Shiseido voting rights in the company, while the second step means the deal has to be approved by the SEC to legitamise it, a procedure that can take as little as five weeks.
Shiseido aims to buy up all the outstanding shares in US-based Bare Escentuals common stock, including 40 per cent of the existing common stock owned by company founder and CEO Leslie Blodgett.
Blodgett intends to remain closely associated with the company and as part of the agreement she will continue to head up the same management team that currently leads the company, which will operate under the Bare Escentuals name as a division of Shiseido.
Shiseido acquires a naturals platform
“This deal really confirms Shiseido’s entry into the global natural cosmetics category,” said Amarjit Sahota, director of market research company Organic Monitor.
“Shiseido’s move also replicates the pattern created by big global players such as Estee Lauder by acquiring the natural brand Aveda. Instead of increasing their footprint by starting up their own natural brands, they have bought into established brands and further developing them.”
Bare Escentuals has risen from virtually nowhere to become one of the biggest names in natural and mineral cosmetics in the US.
Naturals trend triggers growth
Established in 1994, in the period from 2001 the company blossomed from an annual turnover of $30m to a current figure that is now in excess of $600 - growth that has been achieved on the back of huge interest in natural-based cosmetic products.
However, what has held the company back from further growth is the fact that it has remained very much a North American phenomenon, with an estimated 85 percent of its sales currently derived from the United States.
Success in the US has come from retail sales as well as marketing its products on the home shopping television channel QVC, a format that has been difficult to replicate in other global markets where television shopping is not so popular.
Prestige position in Europe
Bare Escentuals established a stronger presence in the UK and other European markets after it bought up UK-based cosmetics distributor Cosmeceuticals Limited back in 2007.
“In Europe Bare Escentuals has chosen to expand its distribution through department stores, positioning it at the prestige end of the market, which also fits with Shiseido’s positioning,” said Sahoto.
Ultimately the deal will mean that Bare Escentuals will be able to tap into Shiseido’s established distribution worldwide, which is likely to lead to significant market growth in the course of the next few years.