In the post “2014 Beauty Acquisition Spree Continues, Plus Up-and-coming Players to Keep an Eye On” on Kline Blogs, the market researcher Kline & Company discussed recent M&A activity in the beauty industry, and also speculates on beauty brands that might be primed for acquisition this year.
The post explains, “After a lull following the global recession of 2009, merger and acquisition activity heated back up in 2013 and strongly continues into 2014. Among the most notable transactions so far this year are Henkel’s acquisition of three U.S. professional hair care brands, Sexy Hair, Alterna and Kenra; Bayer’s purchase of Merck’s OTC and consumer care business, including Coppertone and Dr. Scholl’s; and L’Oréal’s purchase of NYX Cosmetics. The beauty industry has clearly emerged from the recession with a number of buyers that have significant cash on the books who are searching for attractive (and often smaller, niche) beauty brands and are willing to pay more than in previous years. As such, brands that were previously off the market are reconsidering availability.”
Some non-acquisition strategies also are discussed. “Meanwhile, some firms have announced plans to focus on growing their core businesses and to strategically divest the rest. For example, Procter & Gamble recently announced it plans to eliminate about 100 minor brands that do not meet company criteria, which may affect some of its salon hair care and fragrances brands. Henkel has also announced plans to divest non-strategic business units,” the post shares.
Additionally, the post focuses on the success of some of L’Oréal’s most recent acquisitions. “The firm’s first-half  results show rapid growth of its luxury division, driven largely by the success of the brands it had acquired, namely Urban Decay (2012), Kiehl’s (2000), and Clarisonic (2011),” the post notes. “With companies looking for acquisitions that fill gaps in their portfolio–geographically, demographically, or niche-wise–L’Oréal’s acquisition of NYX Cosmetics, which we profile in the ‘Minor Companies’ section of our Cosmetics & Toiletries report, provides the company with a young, edgy brand and a stronger foothold in the makeup artist segment. It is the mass equivalent of Urban Decay, making the brand a perfect fit for L’Oréal.”
Turning to buying strategies in today’s beauty marketplace, Kline writes, “The beauty industry today consists of many beauty brands, some well-positioned newbies and some well-established names. Buyers interested in broader product lines, faster growing segments, new technology, and geographic expansion are now seeking opportunities, searching for the brands with the greatest potential. Kline identifies and profiles many up-and-coming players in our Cosmetics & Toiletries report, including those recently acquired, such as Blow Pro (Farouk), e.l.f. Cosmetics (TPG Growth) and Tarte (Kosé). The upcoming 2014 edition will once again bring out profiles of about 150 smaller marketers including assessments of each company’s business, sales data, and channel and marketing strategies.”
The upcoming edition of Kline’s Cosmetics & Toiletries report will include profiles of the following companies, which the market researcher suspects will be potential acquisition targets in the coming months: