(News Bulletin 247) – The French cosmetics giant announced on Tuesday the acquisition of this promising Australian brand, which allows it to strengthen its portfolio and will create significant revenue synergies in China.

The announcement does not take the market by surprise. Several press articles had reported in recent weeks of great interest from L’Oréal in the Australian brand Aesop for skin, hair and body care.

The tricolor cosmetics giant finally announced, on the night of Monday to Tuesday, an agreement to buy Aesop from the Brazilian Natura & Co, which notably owns the Body Shop and Avon brands. This deal is for an enterprise value of $2.525 billion.

Distributed in high-end boutiques, beauty centers and luxury hotels, Aesop “now stands as a cutting-edge benchmark for products for the skin, hair, body and fragrances based on vegan formulas, natural ingredients now benefiting from upward consumer trends in a world more concerned with self-care and naturalness”, underlines the design office TP ICAP Midcap.

A stronger positioning

Founded in 1987, the company achieved a turnover of 537 million dollars last year, which represents less than 1.5% of L’Oréal’s worldwide turnover of 38.26 billion dollars. euros, in 2022.

“At the scale of L’Oréal, the operation is not significant from a financial point of view, since it will represent a full-year scope effect of 1 point on turnover, while the impact on the financial structure should be limited”, emphasizes Invest Securities. “This acquisition, on the other hand, makes it possible to intelligently strengthen the group’s brand portfolio”, adds the financial intermediary.

For UBS, Aesop fills “a gap in the portfolio” of L’Oréal by giving it exposure to the high-growth segment of high-end personal hygiene. “L’Oréal will strengthen its footprint in luxury skincare, the reversal of which has been major since the Covid and remains extremely buoyant”, considers for its part TP ICAP Midcap.

Focus on China’s growth

Above all, L’Oréal will be able to maximize Aesop’s potential by taking advantage of its status as the leading cosmetics company in China. The Australian brand launched last year in the world’s second largest economy and currently has only two stores in the country.

Thus the acquisition of Aesop offers “significant potential for revenue synergies” for L’Oréal in China, where the French group “has a good track record in terms of market share gains and brand deployments”, judged UBS. in a recent note.

This should amplify the growth of Aesop, already very robust. Over the past four years, the average increase in revenue excluding currency effects has been 18% compared to 7% for L’Oréal, according to UBS. The Swiss bank considers that the growth of Aesop could thus amount to 20% per year after its takeover by the French group, which would allow it to reach one billion euros in revenue from the year 2026.

For Bernstein, L’Oréal is paying for the acquisition of Aesop “at a very reasonable price” in view of the Australian company’s growth and its 20% gross operating margin. “We think this is a very good operation” for L’Oréal, continues the design office. Bernstein particularly appreciates the fact that Aesop only uses vegan products “which is important for young consumers” and emphasizes its positioning “in the high-end beauty field, which is the most attractive part of the beauty industry. beauty, and which allows direct sales to the consumer”.

The virtues of this acquisition will be appreciated in the long term for the market which, for the time being, takes note of the operation without too much passion. The L’Oréal share thus won 0.5% around 10:45 a.m., an increase in line with that of the CAC 40, which for its part won 0.4% at the same time.