According to people familiar with the matter, Reinold Geiger, the billionaire owner of L'Occitane International SA (L'Occitane International SA), is close to making an offer to buy the skincare company. The deal could bring the company's valuation to around $7 billion, including debt.
People familiar with the matter said that Geiger is considering buying shares in L'Occitane that he does not yet hold at a price of HK$33 to HK$34 per share as early as Monday. Since the discussion was private, these people familiar with the matter requested anonymity. According to people familiar with the matter, Blackstone Inc. (BX)'s Tactical Opportunities Fund (Tactical Opportunities Fund) and Goldman Sachs Group Inc. (Goldman Sachs Group Inc., GS) asset management departments are preparing to fund the acquisition deal.
People familiar with the matter said that the takeover offer could bring about 6.5 billion euros (7 billion US dollars) of corporate value to L'Occitane. According to people familiar with the matter, Blackstone and Goldman Sachs Asset Management (Goldman Sachs Asset Management) may provide about 1.6 billion euros in capital.
Exchange documents show that a company eventually controlled by L'Occitane Chairman Geiger already owns more than 70% of the company's shares. L'Occitane suspended trading in Hong Kong on April 9, pending an announcement regarding the takeover code. The stock closed at HK$29.50 the day before, with a market capitalization of around US$5.6 billion.
Earlier this month, it was reported that with funding from Blackstone (Blackstone), Geiger is close to reaching an agreement to privatize the skincare company, potentially ending its 14-year deal on the Hong Kong Stock Exchange (Hong Kong Stock Exchange).
People familiar with the matter said that negotiations are still ongoing, no final decision has been made, and details such as price and timing are still likely to change.
An L'Occitane representative did not immediately respond to reporters' requests for comment. Blackstone and Goldman Sachs declined to comment.
L'Occitane was founded by Frenchman Olivier Baussan (Olivier Baussan) in 1976. He first made essential oils from plants such as lavender in rural Provence and sold them in the local market. Geiger became a minority shareholder in the company in 1994, but he said the company's poor performance prompted him to start working there to protect his investments.
He expanded L'Occitane's business globally. He said that he decided to enter Asia because he was deeply impressed by the work ethic in the Asian region. At first, this strategy worked so badly that his auditor warned that poor performance could put the entire company at risk. The retailer had an initial public offering (IPO) in Hong Kong in 2010 and currently has 8 brands and around 3,000 stores in 90 countries. However, only about one-third of the company's revenue comes from Asia, and America is the region where it is growing the fastest.
L'Occitane is facing increasingly serious challenges in the Chinese market, and international brands such as L'oreal SA (L'oreal SA) and Estee Lauder Cos (Estee Lauder Cos.) all compete in the Chinese market. To compete for more market share, they often launch discounts, and in China, the popularity of domestic brands is also rising.