L'Oreal plans to acquire 10% stake in Swiss skincare firm Galderma

L'Oreal will now acquire 10 per cent stake for undisclosed premium from Sunshine SwissCo AG, Abu Dhabi Investment Authority (ADIA), Auba Investment Pte Ltd

L'Oreal will acquire a 10 per cent stake in Swiss skin care firm Galderma from a group of major shareholders, the two companies said on Monday, as the French firm seeks a cut of the profits from the booming injectable cosmetics market.
 

Galderma, originally set up as a joint venture between Nestle and L'Oreal before the latter sold its 50 per cent stake in 2014, listed an initial tranche of its stock in late March.
 

L'Oreal will now acquire a 10 per cent stake for an undisclosed premium from Sunshine SwissCo AG - a consortium led by Swedish private equity firm EQT - Abu Dhabi Investment Authority (ADIA) and Auba Investment Pte. Ltd.
 

 

Shares in Galderma, which had a market capitalisation of almost 16 billion Swiss francs ($18.85 billion) at Friday's market close according to LSEG data, jumped more than 7 per cent after the news and were on track for their best day since listing.

Shares in L'Oreal fell around 1 per cent.
 

The stake, worth 1.6 billion Swiss francs based on Galderma's market cap, is small for the French firm, Europe's sixth largest.

But it marks a shift in its strategy, giving it a stake in injectable products that reduce wrinkles such as fillers and neuromodulators, which include botox, for the first time.
 

"It allows us to explore partnering in the fast-growing aesthetics market, a key adjacency to our own pure beauty play," L'Oreal CEO Nicolas Hieronimus said in a statement.
 

About half of Galderma's revenue comes from injectables. The market was worth 9.3 billion euros last year, Hieronimus told analysts on a call.
 

"The penetration rate of these procedures already stands at mid-single digits and looking at the number of people who consider using these procedures, the penetration rate could double in the next decade," he said.
 

The two companies also signed a memorandum of understanding to work on research and development collaboration.

The deal will ultimately enable the pair to jointly develop new products to expand their respective portfolios, said a Galderma statement.
 

"The stake is positioned as a strategic interest, to facilitate cooperation on product development, but we assume that this is also a way to get closer to Galderma with a view of higher ownership/control over time," said analysts at Jefferies.
 

L'Oreal will not take a seat on Galderma's board to prevent any relationship on similar business activity, executives said.

The two firms also compete in skincare with Galderma's Cetaphil brand and L'Oreal's CeraVe.
 

L'Oreal's dermatological beauty division, which also includes the La Roche-Posay brand, has grown by high-double digits in recent years, boosted by social media and consumer interest in science since the COVID pandemic.
 

But growth in the unit slowed in the second quarter to 10.5 per cent, missing estimates, partly a result of increasing competition.
 

The global aesthetics market is predicted to grow to $25.9 billion by 2028 from $15.4 billion last year, according to MarketsandMarkets.
 

"The techniques of injections have evolved very strongly, it's easier to do and less painful," added Hieronimus.
 

The transaction will be funded with L'Oreal's available cash and credit lines, and is expected to be completed in the coming days, the French company said.

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