L’Occitane to go private in US$1.8B deal as Geiger tightens grip

30 Apr 2024 --- Billionaire Reinold Geiger is moving to privatize L’Occitane International. The French beauty house’s controlling shareholder L’Occitane Groupe — chaired and directed by majority shareholder Geiger — has offered to buy all remaining outstanding shares to give the company more “flexibility to invest in long-term growth initiatives.”

The deal is worth up to HK$13.91 billion (US$1.8 billion), while L’Occitane International’s total equity is valued at US$6.4 billion.

L’Occitane Groupe currently owns 72.64% of the company’s shares. Geiger reportedly twice attempted a buyout in the last year.

If the offer succeeds, L’Occitane will be delisted from the Hong Kong Stock Exchange. The company intends to conduct a squeeze-out of any remaining shares not tendered by the deadline of August 26, subject to extension.

Under the terms of the offer, it will acquire all remaining outstanding shares (excluding treasury shares) for HK$34 (US$4.35) per share, representing a 30.77% premium over the stock’s price before news of the potential privatization leaked.

“Our family has always taken a responsible, long-term view when it comes to developing our company,” says Geiger.

“The cosmetics sector is undergoing profound changes and our company has significantly transformed into a geographically balanced multi-brand group, marked by strategic acquisitions such as Elemis, Sol de Janeiro, and, most recently, Dr. Vranjes Firenze,” he adds. 

“The transaction we are launching today will enable us to focus on rebuilding the foundation for the long-term sustainable growth of our company.”

Reinold Geiger, chairman, director and majority shareholder of L’Occitane Groupe.Prioritizing flexibility amid market competition
L’Occitane International halted trading of its Hong Kong-listed shares earlier this month. It has been trading on the Hong Kong Stock Exchange since May 2010.

L’Occitane Groupe underscores that competition in the global skin care and cosmetics industry “continues to intensify” with the entry of new international and local brands, prompting its push to privatize its subsidiary.

The deal comes into consideration in light of “pressures of the capital markets expectations, regulatory costs and disclosure obligations, share price fluctuations and sensitivity to short-term market and investor sentiment.”

The company believes privatization will allow “greater flexibility” to pursue long-term investments in marketing, store refurbishment, IT infrastructure and talent acquisition, which are deemed crucial for maintaining market share in an increasingly competitive environment.

L’Occitane’s FY23/24 interim report highlights net sales of 41.3% in the Americas, 24.1% in EMEA and 34.6% in Asia Pacific. H1 2024 reported net sales of €1,072 million (US$1.2 billion) compared to €900.5 million (US$967 million) in the same period last year.

Intention to retain employees
While the privatization is subject to shareholder approval, the significant premium offered and existing support suggest a high likelihood of success.

To go private, L’Occitane Groupe needs at least 90% approval from disinterested shareholders (those not affiliated with L’Occitane Groupe). The group has already secured backing from disinterested shareholders, representing roughly 25.79% of the outstanding shares. 

Additionally, disinterested shareholders, with another 12.17%, have either indicated their support for the offer or provided non-binding letters of support.

L’Occitane Groupe affirms its intention to continue operating its subsidiary’s business and retain employees across all geographies, other than the changes that would occur in the ordinary course of business.

L’Occitane Groupe believes privatization will allow “greater flexibility” to pursue long-term investments.It has also established arrangements for holders of options and free shares to convert their holdings into cash.

“In sum, [L’Occitane Groupe] believes that a take-private transaction in its current form allows shareholders to derive maximum benefit and avoid exposure to uncertain market conditions,” maintains the company.

The beauty house intends to finance the consideration through a combination of external debt facilities provided by Crédit Agricole Corporate and Investment Bank, with additional financing capital provided by funds managed by Blackstone and its affiliates and Goldman Sachs Asset Management International or its affiliates.

J.P. Morgan Securities (Asia Pacific) is acting as the exclusive financial adviser to the deal. Crédit Agricole Corporate and Investment Bank and Corporate Finance International are acting as exclusive financial advisers to L’Occitane Groupe in connection with the raising of capital and the overall structuring of the financing.

This month, biological beauty company Grown Alchemist decided to leave the L’Occitane Group to become a privately held company. Andre Hoffmann, the former vice-chairman and CEO of L’Occitane International, acquired a majority controlling stake, with Grown Alchemist’s CEO, Anna Teal, taking on a minority shareholder role.

By Benjamin Ferrer