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A Fertile M&A Climate In US Personal Care

June 6, 2013

• The US cosmetics and toiletries market continues to perform well, posting 3.4% growth in 2012, with sales signifying success for both key and niche industry players, according to recently published Cosmetics & Toiletries USA report from Kline & Company.

Kline contends that Anthony
Brands, which sells skin care
products like these, has high
potential for acquisition based
on its solid presence in the male
grooming market and a high level
of innovative product launches. 
While P&G maintains its lead in the US personal care market, its market share across multiple categories is being challenged. According to Kline, other major companies—in particular, L’Oréal and Estée Lauder—are enjoying steady growth.

But it is at the macro level where the flourishing personal care market is offering the most promise. According to Kline, smaller companies are making headway and highly viable impressions.

Due to a fertile M&A climate, smaller companies are attractive acquisition prospects for larger, cash-rich and savvy players. As a telling example, earlier this year, L’Oréal’s CEO Jean-Paul Agon announced that he was ready to make important acquisitions to maintain growth, and this has already been borne out by the recent acquisition of Interconsumer Products, one of Kenya’s largest manufacturers of personal care and beauty products (see Happi’s May 2013 issue, p. 24).

“Clearly, companies continue to emphasize growth agendas and make significant funding available—both strategic and financial sponsors—to realize such aspirations,” noted Eric Vogelsberg, senior VP at Kline’s M&A Advisory. “Such an improving environment is increasingly attractive for M&A, and a growing number of smaller, often privately-held, cosmetic and toiletry companies are contemplating, developing, and/or executing exits. As such, 2013 portends to offer even greater deal flow as many companies look to invest in new growth opportunities.”

The Cosmetics & Toiletries USA report, consisting of almost 150 profiles of smaller and especially dynamic cosmetic and toiletry companies, reveals particularly promising companies that have been identified as positive net-value prospects, and they are also presently competing in segments that are expected to post higher-than-industry-average growth.

For starters, there’s New York City-based Anthony Brands, which Kline contends has high potential for acquisition based on its solid presence in the male grooming market and its high level of innovative product launches. Similarly promising is Vogue International, a distributor of hair care and other personal care products in nearly 42 countries worldwide with a potential based on prolific R&D, mass brands with broad appeal and a recognized name.

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