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Kosé Corp. To Acquire Tarte

Posted: March 18, 2014

Japan-based beauty company Kosé Corporation announced it signed an agreement on March 4, 2014, to acquire Tarte, Inc., a New York-based color cosmetics and skin care brand that specializes in products based on naturally derived ingredients. The majority of the Tarte's sales are in North America, and Kosé is buying a 93.5% stake for $135 million in Tarte in order to help obtain a foothold in the U.S. market. The closing of the acquisition is subject to antitrust clearance in the U.S., as well as other customary closing conditions.

According to the company, Kosé is taking many actions aimed at expanding its overseas operations, part of a theme of "concentrating on growth drivers," which is one of the basic strategies of the company’s current medium-term management plan. Until now, Kosé’s operations outside Japan have been mostly in Asia and the ASEAN region. However, the company is now starting to increase its pace in becoming a more global organization by entering countries where the company does not yet have a presence. Acquiring a well-known North American brand gives Kosé a new source of growth outside Japan that is expected to contribute to achieving the goals of its medium-term management plan.

Tarte sells a line of color cosmetics and skin care products primarily in the U.S. that are made using "high-performance natural ingredients" called “skinvigorating” ingredients, which are derived from natural substances. Tarte's products are sold through premium distribution channels such as Sephora, Ulta and Macy's Impulse, in addition to on Tarte's own website and on TV through QVC. Tarte's cosmetics and skin care products are very popular among women in their 20s and 30s, and sales have grown consistently since Tarte began operations in 1999.

“It’s been an amazing ride, from the little venture I started in my bedroom 15 years ago to the global powerhouse we’re privileged to now join,” said Maureen Kelly, founder and CEO of Tarte. “Our vision throughout has been to create beauty products that are ‘healthy treats for your skin,’ foster the highest level of customer service and give back to the community and the environment. By joining the Kosé family and adding to that rich portfolio, we can build on what we’ve already accomplished with powerful products targeted at new markets.”

Tarte steadily increased its market presence over the years and received a boost through an investment in 2010 from Encore Consumer Capital, a San Francisco-based private equity firm focused specifically on consumer products companies. Since then, Tarte has significantly expanded its footprint throughout North America open-sell environments and specialty distribution channels with market-leading retailers such as Sephora, Sephora Inside JCPenney, Ulta, QVC and Macy’s Impulse. tarte has also grown its international presence with Sephora South East Asia and QVC UK.

Following the closing, Kosé and Tarte will develop a comprehensive integration plan to incorporate Tarte into the Kosé family. The senior executive team—including Kelly, general manager Scott McDonough, vice president of finance Heather Hemsley and vice president of brand Candace Craig Bulishak—will continue to lead the organization, as well as play key roles to draw strength from the parent company and ensure the continued success of Tarte. The brand will keep its headquarters in the New York office.

By acquiring Tarte, Kosé plans to heighten its stature in North America while continuing to expand overseas operations and add new sales channels and customers. Looking ahead, Kosé plans to close the acquisition of Tarte stock in April 2014, so this acquisition will not affect Kosé’s consolidated results of operations in the fiscal year ending on March 31, 2014.