Skincare products and services represent a growing industry in Asia as the middle class expands throughout the region. Beauty conglomerates headquartered in the U.S. and Europe are responding quickly, sealing M&A deals to reach the new customers.
Estée Lauder Cos. (NYSE: EL), headquartered in New York, completed its investment in Have & Be Co. in December. Based in Seoul, South Korea, Have & Be sells moisturizers and cleansers that are sold in the U.S. and Asia under the Dr. Jart+ and Do The Right Thing brands. Estée Lauder is interested in expanding some of its other brands in Korea too. The company said that it launched Glamglow in Korea earlier in 2016. Estée Lauder completed the acquisition of the Hollywood, California-based facial mask maker in January 2015 for an undisclosed amount.
Beauty balms and blemish balms, known as BB creams, are popular in South Korea and have also been gaining adoption in North America. BB creams are typically sold as all all-in-one products that combine moisturizer, sunblock and foundation.
Competitors, including L’Oreal SA and Revlon Inc.(NYSE: REV), have been buying skincare distributors with either significant presence in Asia, or plans to develop one. Paris-based L’Oreal SA agreed in July to acquire IT Cosmetics from TSG Consumer Partners for $1.2 billion. Jersey City, New Jersey-based IT Cosmetics has plans to expand in additional Sephora retail stores in the U.S. and Asia. IT Cosmetics sells makeup and anti-aging creams. L’Oreal has made deals in Asia before. In 2014, L’Oréal bought China-based facial mask producer Magic Holdings International Ltd.
In June, New York-based Revlon reached a deal to buy Elizabeth Arden Inc. (Nasdaq: RDEN) for $870 million. Revlon said the acquisition will put it in a better position to compete globally, particularly in Asia. In 2015, Elizabeth Arden announced a joint venture deal with beauty products distributor Luxasia Ventures as part of its efforts to boost the company's presence in the region. Elizabeth Arden, located in New York, is known for its skincare, cosmetics and fragrance brands.
Consumers around the world are constantly looking for new ways to care for their skin, and that will drive up demand for skincare producers.