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Henkel Buys Three Hair Companies to Expand in U.S. Market

June 2 (Bloomberg) -- Henkel AG, the German maker of Loctite glue and Persil washing detergent, agreed to buy U.S. companies SexyHair, Alterna and Kenra for about 270 million euros ($368 million) to add hair care and styling products in the world’s single biggest market for those offerings.

Henkel will buy the companies in cash from TSG Consumer Partners, and the businesses being acquired generated sales of about 140 million euros in 2013, Dusseldorf, Germany-based Henkel said in a statement.

“They are a little under-represented in the U.S. and it makes sense for Henkel to strengthen in the beauty segment,” Peter Steiner, a Frankfurt-based analyst for Bankhaus Metzler who recommends buying Henkel shares, said by telephone. “It looks pretty reasonable and the pricing seems more-or-less OK too.”

The deal is the biggest for Henkel, founded in 1876 as a detergent maker in Aachen, Germany, since its 4 billion-euro acquisition in 2007 of adhesives and electronic materials businesses from Akzo Nobel NV, according to data compiled by Bloomberg. Chief Executive Officer Kasper Rorsted has said he’s looking for acquisitions of any size that fit the company’s strategy and has about 4 billion euros to 4.5 billion euros available for purchases.

Henkel shares fell 0.1 percent to 84.61 euros at 9:16 a.m. in Frankfurt. The stock has climbed 0.4 percent this year, valuing the company at 34.4 billion euros.

Acquisition Strategy

“This acquisition is part of our strategy to invest in attractive country category positions in mature markets,” Rorsted said in the statement. “North America is the biggest single market for Henkel.”

The company on May 7 reported first-quarter earnings that beat analyst estimates on higher demand from emerging markets such as China, Russia and Turkey. The German company’s earnings contrasted with rival Unilever, which forecast weaker profit margins in the first half and reported the slowest sales growth at its personal care unit in more than three years.

Henkel’s beauty segment reported earnings before interest and taxes representing 14 percent of the unit’s 3.5 billion euros in sales last year.

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Robert Valpuesta

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