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Shiseido to Acquire Bare Escentuals for $1.7 Billion

Posted: January 15, 2010

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Shiseido aims to boost overseas sales to 50% of overall revenue by 2017. After the deal, that figure will rise to 42%, the company estimates. Moreover, it says it believes in Bare Escentuals' global growth potential as increasing numbers of women turn to cosmetics with more natural ingredients.

"This acquisition further enables Shiseido to move toward our goal of becoming a global player," said Shinzo Maeda, president, Shiseido. "Shiseido's well-established Asian distribution channels can help Bare Escentuals tap lucrative markets in the region."

Blodgett, who owns 6% of Bare Escentuals, will maintain a smaller stake in the company after selling 40% of her holdings to Shiseido. Its top shareholder, Berkshire Partners LLC, has agreed to sell its 16% stake to Shiseido.

Bare Escentuals will be delisted from the Nasdaq after the acquisition.

Upon the news in Tokyo, Shiseido jumped 5.1% to 2,040 yen on the Tokyo Stock Exchange, beating the Nikkei 225 index's 0.7% rise. However, Standard & Poor's placed Shiseido's debt ratings on "CreditWatch Negative with negative implications." Shiseido will shoulder about $1.9 billion in total costs, including Bare Escentuals' debt. It said it plans to pay with 30 billion yen ($330 million) in cash and the rest in bridge loans. Standard & Poor said Shiseido's financial soundness will "substantially deteriorate" after the purchase, with debt exceeding liquidity in hand.