L'Oreal to buy Chinese skincare company Magic Holdings for $840 mn

L'Oreal, the world's largest cosmetics and beauty company, is buying Chinese skincare company Magic Holdings International for HK$6.5 billion ($840 million).

The Paris-based company has offered to pay HK$6.30-a-share, a premium of about 25 per cent over Magic Holdings last trading price of HK$5.05 a share on the Hong Kong Stock Exchange.

L'Oreal said Magic Holdings board and shareholders, representing 62 per cent of the company's equity, support the proposed deal, which requires approval from China's commerce ministry.

L'Oreal expects to fund the deal through internal resources and a €650 million credit facility from BNP Paribas.

Magic Holdings makes skincare products and is the largest maker of cosmetic facial masks in China with a 26.4-per cent market share in China.

It offers a diversified mix of facial mask products with different characteristics to cater for different skin types in China. Its MG brand has 13 series and over 167 types of facial mask products.

The Guangzhou, Guangdong Province-based company has 288 distributors with 12,471 points of sale spread over 23 provinces, 5 autonomous regions and 4 municipalities in China and has an annual turnover of €150 million.

Facial masks are one of China's beauty market's fastest growing areas with very promising development prospects and L'Oréal intends to develop this Chinese brand by contributing its science based expertise, and using its advanced and applied research in its China Research & Innovation center and across the world.

L'Oréal, which has been in China since 1997, has 3 500 employees in China, a Research and Innovation center in Shanghai and two plants in Suzhou and Yichang.