L’Occitane enters trading halt ahead of probable takeover bid
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Hong Kong-listed cosmetics giant L’Occitane International has entered a trading halt – fuelling speculation that the company’s controlling shareholder is about to launch a takeover bid ahead of a delisting.
Bloomberg reported on July 25 that L’Occitane’s Austrian billionaire chairman Reinold Geiger, whose interests control 70 percent of the issued stock, was mulling buying out minority shareholders. The news agency cited sources that requested anonymity.
Today, Bloomberg said an offer is “possible” at about US$4.48 per share, representing a 37 percent premium to the company’s closing price on Tuesday.
In June, the company reported 19.8 percent growth in net sales for the year to March 31 to surpass US$2.33 billion, but a decline in operating profit of 23 percent to $261.12 million, largely due to impairments. During the past year, L’Occitane’s share price has shed 20 percent of its value to about $4 billion.
L’Occitane’s recent sales growth has been largely driven by its Brazilian brand Sol de Janeiro – now the group’s second-largest label behind its namesake, achieving sales growth of 135.2 percent last year – and another spinoff brand, Elemis collagen creams. At the end of March, L’Occitane bought Australian skincare brand Grown Alchemist for an undisclosed sum and promptly set about expanding its reach and store network. Its other labels include the Korean skincare brand Erborian and the French organic beauty label Melvita.
This would not be the first time the company has considered going private. In late 2018, US-based private equity group Advent International – which this week acquired a majority stake in Australian fashion brand Zimmermann – reportedly enquired about acquiring the company, which then had an estimated market value of US$2.7 billion.
According to Bloomberg data, L’Occitane was listed in 2010 with an IPO that raised $787 million. The news agency said Geiger was also considering relisting the business in Paris or another European market as early as next year.
Questions & Answers
Q.What is the primary reason for L’Occitane International entering a trading halt?
What is the primary reason for L’Occitane International entering a trading halt?
The trading halt fuels speculation that the company's controlling shareholder is preparing to launch a takeover bid. This action is likely a precursor to delisting the company from the stock exchange.
Q.Which of L’Occitane’s brands have contributed most significantly to its recent sales growth?
Which of L’Occitane’s brands have contributed most significantly to its recent sales growth?
Its Brazilian brand Sol de Janeiro largely drove recent sales growth, becoming the group's second-largest label. Another spinoff brand, Elemis collagen creams, also contributed significantly.
Q.How has L’Occitane’s financial performance been recently, despite sales growth?
How has L’Occitane’s financial performance been recently, despite sales growth?
Despite achieving nearly 20 percent growth in net sales, the company experienced a 23 percent decline in operating profit. This fall was largely attributed to impairments during the last financial year.
Q.Has L’Occitane considered going private on a previous occasion?
Has L’Occitane considered going private on a previous occasion?
Yes, this is not the first time the company has considered going private. In late 2018, US-based private equity group Advent International reportedly enquired about acquiring the company.
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