Clariant to acquire Lucas Meyer Cosmetics from International Flavors & Fragrances for US$810M
30 Oct 2023 --- Specialty chemicals giant Clariant is acquiring Lucas Meyer Cosmetics, an ingredients supplier for the cosmetics and personal care industry, from International Flavors & Fragrances (IFF) for a total cash consideration of US$810 million. The proposed transaction is subject to regulatory approvals and customary closing conditions and is expected to close in the first quarter of 2024.
By combining its personal care ingredients portfolio with Lucas Meyer Cosmetics, Clariant anticipates to boost its business in cosmetic ingredients, which it deems “one of the most attractive, profitable and fastest-growing specialty chemicals markets.”
The acquisition is slated to ultimately strengthen Clariant’s North America presence, particularly in its Care Chemicals business unit.This move is slated to ultimately strengthen Clariant’s North America presence, particularly in its Care Chemicals business unit, which recently recorded a sales decrease amid macroeconomic uncertainties in August.
“Lucas Meyer Cosmetics represents a significant, exciting growth opportunity for Care Chemicals. It is a perfect fit with our business, given the complementarity of our customers and products,” comments Christian Vang, president of the Clariant Business Unit Care Chemicals and the Americas region.
“Combining our respective strengths, including the R&D and innovation capabilities of Lucas Meyer Cosmetics, backed by a strong brand, will enable us to deliver a strong increase in annual sales to US$180 million in 2028 from around US$100 million currently.”
Lucas Meyer Cosmetics, founded in 1999, oversees global R&D and regional application centers. The Canadian company discloses around US$100 million of revenues attributed to an asset-light model and outsourced production.
The deal will close on a debt-free, cash-free basis, it will be based on a calculation that values Lucas Meyer Cosmetics at 16.3 times its earnings before certain expenses from the last 12 months as of August 2023.
Strategic and financial rationale
With around 10% sales growth and high cash conversion, Lucas Meyer Cosmetics exceeds Clariant’s financial target metrics for 2025. The transaction is expected to be mid-single digit percentage accretive to EPS from year one onwards.
The funding for the acquisition has been secured by a fully committed bridge facility which is intended to be refinanced soon after completion.
On completion, Clariant’s net leverage is expected to moderately increase to around 2.8 times EBITDA.On completion, Clariant’s net leverage is expected to moderately increase to around 2.8 times EBITDA. Clariant expects no change to its investment grade credit rating.
“The proposed acquisition of Lucas Meyer Cosmetics marks another major step forward for Clariant’s purpose-led growth strategy. It will strengthen our position as a true specialty chemical company, our exposure towards consumer markets and our footprint in North America, while supporting our goal to accelerate customer and sustainability driven innovation,” says Conrad Keijzer, CEO at Clariant.
“With this step, we will build on our successful track record of pursuing and integrating bolt-on acquisitions to enable value creation and profitable growth.”
Clariant business activities
In other developments, Clariant recently unveiled its latest innovation for hard-to-thicken laundry detergent formulations, TexCare Gemini SG Terra. The solution offers formulators a “one product, double function” soil release polymer that keeps the rheology of the detergent under control.
In line with the growing market for clean label ingredients, Clariant has been innovating in the space of plant-based formulations and solutions that promote inner wellness. The supplier recently released its Feel-Good Magic Stick and Forget-It-All Relaxing Mask as part of its new “The Joyologist” concept, focused on delivering a multi-sensory experience to consumers for mood enhancement and relaxation.
By Benjamin Ferrer
