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Shiseido in Advanced Talks With CVC Capital For Divestment

Stock MarketsJan 21, 2021 11:18PM ET
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© Reuters.

By Gina Lee

Investing.com – Japan’s Shiseido Co. Ltd. (T:4911) is in advanced talks to sell its shampoo and affordable skincare business, including its Tsubaki hair-care products line, to CVC Capital Partners. The deal is expected to fetch between JPY150 billion to 2000 billion, or $1.45 billion to $1.93 billion.

Shiseido shares were up 4.94% to JPY7110 ($68.69) by 12:15 PM ET (4:15 AM GMT). They climbed up to 6.5% earlier in the session, the biggest intraday climb since November 2020.

The Japanese company’s board is reportedly preparing to vote on the deal soon. It confirmed it was in discussions with CVC Capital to sell the unit, and that “no formal decisions have been made as of yet.” However, negotiations could still be delayed or even fall apart, people with knowledge of the deal warned.

Founded in Tokyo’s Ginza district as a pharmacy in 1872, Shiseido has been seeking to revamp its portfolio by exiting non-core businesses by the end of 2021. The company's Chief Executive Officer Masahiko Uotani also said in 2020 that asset sales could be necessary as it prioritizes cash.

The revamp was triggered by the change in cosmetic and personal care routines during COVID-19, which has dealt a blow to beauty companies.

A tenth of the company’s revenue in 2019 came from its lifestyle and personal care business, with annual sales of about JPY100 billion. The focus has shifted in recent years to the company’s high-end prestige beauty portfolio, which includes brands like Cle de Peau, NARS and the eponymous Shiseido brands. Shiseido has also made acquisitions to augment the portfolio, paying $845 million for the Drunk Elephant brand in 2019.

Shiseido in Advanced Talks With CVC Capital For Divestment
 

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