Colgate Acquires Prestige Skin-care Brand Filorga in 1.5 Billion Euro Deal

Colgate has reached a deal to buy Laboratoires Filorga Cosmétiques for 1.5 billion Euros.
The deal is meant to bolster Colgate’s access to high margin categories, and follows the company’s acquisitions of EltaMD and PCA Skin in late 2017.
Filorga is a high-end antiaging skin-care brand based in France. The business has a significant international presence in Italy, Spain and China.
WWD reported in January that the brand had hired BNP Paribas and Goldman Sachs to explore sale options. The process was said to begin in February, according to industry sources, and the business was said to have 50 million Euros in earnings before interest, taxes, depreciation and amortization. The auction for Filorga was a competitive one among the industry’s strategic players, according to industry sources.
“Filorga is a strong, premium-priced brand with distinctive positioning that fits well within our long-term personal care growth strategy. We are excited that this acquisition will add a high-growth, profitable, global skin care asset to the Colgate portfolio with the opportunity to drive continued growth through expanded distribution and awareness. This acquisition also provides Colgate entry into the fast-growing and sizable travel retail channel, particularly in Asia,” said Noel Wallace, Colgate president and chief executive officer.
Colgate is financing the deal with cash and debt, and it’s expected to close in the third quarter.
The deal comes after Colgate is said to have lost the auction for Elemis, which went to L'Occitane for $900 million, industry sources said. In late 2017, Colgate started building out its professional beauty portfolio with EltaMD and PCA Skin. At that time, RBC analyst Nik Modi called the move "smart" and noted its a category "that Colgate can grow at a reasonable cost."
Competition in beauty M&A has been fierce in recent years, but things have gotten particularly competitive for skin-care brands as the category experiences growth. Aside from Filorga and Elemis, Unilever recently paid nearly $500 million to acquire Tatcha, a skin-care business modeled after beauty rituals of the geisha.
While Tatcha never went through a traditional process, the market for skin-care acquisitions is becoming so competitive that many of the companies are shown exclusively to strategic buyers, and not to private equity players. That is said to have been the case for Elemis, and for Drunk Elephant, which is said to be on the market with Moelis and Financo as bankers.
While skin-care experienced a sluggish period a few years ago, when makeup was the star of the show, the category has been growing significantly for more than a year. Several of the large beauty companies — including the Estée Lauder Cos. — have cited skin-care as a major source of growth on recent earnings calls. Data from the NPD Group showed that prestige skin care sales were up 13 percent for 2018, to $5.6 billion.
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