Betterware enters US and Mexican personal care markets with US$255M Jafra acquisition
19 Jan 2022 --- Jafra’s operations in the US and Mexico will be acquired by home organization Betterware de Mexico SAPI de CV (Betterware) for US$255 million.
The acquisition targets the growing beauty and personal care (B&PC) market in the US and Mexico, which the companies say is worth US$100 billion per year. It will also allow Betterware to capitalize on advancing e-commerce between North and South America.
Alternatively, Jafra has the potential to revamp by leveraging Betterware’s “scale and infrastructure” digitally, says Luis Campos, executive chairman of Betterware’s board.
“This acquisition will expand our growth potential as we extend our geographic reach to include North America, strengthen our positioning in Mexico and expand our categories served to include the B&PC products,” he adds.
Anticipating operational synergies
A definitive agreement has been signed confirming Betterware’s acquisition of Jafra’s operations in Mexico and the US from the Vorwerk Group, Germany. Betterware plans to close the financial transaction by mid-2022.
Meanwhile, Jafra will operate as a subsidiary. Its management team will focus on operations and growth strategies.
Betterware, on the other hand, will reinforce its business strategies over Jafra’s operations. The three methods include product innovation, technology and business intelligence. This move projects operational synergies.
Having separate management teams in both companies will ensure independence.
Betterware is a direct-to-consumer company in Mexico, while Jafra is an international direct-sales marketer.
Long-term profitable expectations
Betterware intends to position Jafra as the leading company for B&PC in Mexico and the US. This decision is motivated by the belief that strengthening Jafra’s technology tools and platform will allow wider market reach and improved e-commerce in the US and Mexico.
The acquisition is “financially compelling” and will provide a long-term strategy for increased sales and thus profitability.
The deal will likely add an estimated US$0.341/share to earnings per share (EPS) in 2022 and more than US$46 million of Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), notes Betterware.
Accounting for the synergies, the EPS would be US$0.48 – an accretion of approximately 20% and an EBITDA add of US$54 million.
There have been a host of other acquisitions in the personal care space in recent weeks. Examples include Bic and Inkbox, Anjac and Apollo, and B2LiNK and Picky.
Edited by Venya Patel
