04.29.24
The board of directors of L'Occitane International SA has confirmed that Reinold Geiger, chairman and director of L'Occitane Group, has made an offer to acquire the remainder of the beauty clmpany that he does not already own. Geiger's intention is to privatize and delist L'Occitane company from the Hong Kong Stock Exchange.
The rationale is to allow the current management team—which would remain in place—to continue operations of the company's business as it is and invest in long-term sustainable growth initiatives as a privately held company.
Geiger offered a purchase price of HK$34 per share, which values the company at approximately $1.78 billion
Geiger 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 Inc. and its affiliates and Goldman Sachs Asset Management International or its affiliates.
In response, the board has established an Independent Board Committee comprised solely of dedicated independent non-executive directors to evaluate the offer. As independent financial adviser, Somerley Capital Limited has been appointed by the company, and approved by the IBC, to advise the IBC in connection with the offer. The IBC's recommendation will be included in a composite document to be jointly published by the offeror and the company, which will officially commence the offer.
Flexibility to Invest in Growth Initiatives
Geiger believes that – in order to maintain and invigorate the respective market shares of the company's brands in an increasingly competitive environment – significant further investment in marketing, store refurbishment, IT infrastructure and attracting talent are of importance. These investments would entail incurring more expenses to lay the foundation for longer-term growth.
The offer also provides greater flexibility to the company, as a privately-operated business, to pursue strategic investments and more efficiently implement strategies, free from the pressures of the capital markets' expectations, regulatory costs, and disclosure obligations, share price fluctuations, and sensitivity to short-term market and investor sentiment. This flexibility is particularly important due to competition in the global skincare and cosmetics industry continues to intensify with the entry of new international and local brands, officials said.
Privatizing the company would better address these challenges by enabling it more efficiently and effectively implement strategies that are vital for longer-term sustainable growth, officials said.
Employee Retention
For the company's employees and business partners, the transaction would provide it with greater flexibility in making longer-term focused business decisions and pursuing long-term sustainable growth, it said Geiger has stated its intention to continue operating the business and retain employees across all geographies, other than the changes that would occur in the ordinary course of business.
"Our family has always taken a responsible, long-term view when it comes to developing our company,” said 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. The transaction we are launching today will enable us to focus on rebuilding the foundation for the long-term sustainable growth of our company."