Posted by Sara Zucker on January 18, 2010 11:39 AM
With cosmetics companies extolling the benefits of mineral makeup, it makes sense that Shiseido would purchase Bare Escentuals. In an attempt to revamp its global presence and enter emerging markets, the larger Japanese brand will spend $1.7 billion to buy the line that has championed the mineral movement. That should buy a lot of powder.
"Bare had good opportunities for growth internationally, but the size that they are, they needed greater resources. Shiseido provided them so many greater resources... into Europe and into Asia," said Jason Gere, an analyst at RBC Capital Markets.
This partnership will broaden Bare Escentuals' brand exposure with placement in outlets like QVC, boutiques, and retail stores such as Sephora and Ulta. International sales made up a mere 11.9% in 2008 for the San Francisco-based brand. Before the deal was sealed, Bare Escentuals' shares fell 2.1 percent to $12.74 and, in the past few months, fell 5.5 percent. By midday Friday, shares were up 42 percent and Shisiedo shares also increased.
Bare Escentuals will be controlled as a subsidiary of Shiseido while keeping its current management, including Leslie Blodgett, the company's chief executive and public face. In exchange for 40% of her shares in the business, Blodgett will retain a $34 million life insurance policy.
Blodgett said in a statement, “Together with Shiseido, we look forward to bringing our mineral-based beauty products to even more women worldwide.”
Though Shiseido is considering additional overseas acquisitions, no other plans have been made.