LG Household & Health Care Ltd. (051900), a South Korean cosmetics and beverages company, is considering a bid for fragrance maker Elizabeth Arden Inc. (RDEN) as it looks to expand locally and overseas by buying rivals.
The Seoul-based company, which also makes household cleaning goods, is looking at “big deals” locally and overseas, including one for Elizabeth Arden, Lee In Ick, a spokesman for the LG Group unit, said by telephone today.
LG Household would become a global luxury beauty company with the Elizabeth Arden deal, which may be valued at more than 1 trillion won ($963 million) including goodwill, Maeil Business Newspaper reported, citing an investment bank official it didn’t identify. The news sent Elizabeth Arden shares up the most in almost two years today in New York.
A transaction that size would be the largest ever for LG Household, which spent about $34 million on three purchases last year and $485 million on four deals in 2012, according to data compiled by Bloomberg. LG Household plans to team up with institutional investors in South Korea to initially take a controlling stake in Miramar, Florida-based Elizabeth Arden before buying out the remaining shares, Maeil reported.
Elizabeth Arden shares jumped 12 percent to $31.83 in New York, marking the biggest one-day gain since August 2012. The stock had slumped 20 percent this year through yesterday, giving it a market value of $844 million. LG Household rose 3.1 percent to 495,000 won at the close in Seoul trading, reducing its decline this year to 9.7 percent.
LG Household makes WHOO Hwanyugo skin-care products, as well as perfumes, fabric deodorant, toothpaste and beverages, according to the company website. Elizabeth Arden makes celebrity-branded scents for names such as Justin Bieber and Britney Spears.
The U.S. cosmetics company, which also owns fragrance brands including Halston, Guerlain and Nautica, in January dropped its earnings forecast for the fiscal year ending June 30, citing slower holiday sales.
LG Household is South Korea’s second-largest seller of beauty and personal care products, with a 24 percent share of the market, according to research firm Euromonitor. It trails AmorePacific Corp., which has 26 percent.
The company acquired domestic cosmetics brand TheFaceShop Ltd. in a $363 million deal completed in 2010 and agreed to pay about $307 million for Japan-based toiletries company Everlife Co. in 2012. It also set up a joint venture with Coty Inc., the owner of the Philosophy skin-care brand, to sell beauty products in the Asian country.