Coty Pays $400 Million to Acquire Control of China Skin-Care Company TJoy
Coty Inc., the seller of perfumes by Sarah Jessica Parker and Vera Wang, will pay $400 million to acquire a majority stake in Chinese skin-care company TJoy Holdings Ltd. as it expands in the world’s most-populous nation.
Coty will pay in cash and TJoy’s management will hold the remaining shares in the company, Guo Yuanqing, General Manager of TJoy’s Beijing operations, said yesterday. He said founder Zhuang Wenyang will stay as TJoy’s chief executive officer.
The acquisition is the fourth that closely held Coty has announced in the past month as it bolsters its cosmetics business. Coty, which said sales rose 3 percent to 3.6 billion in its 2010 fiscal year, is increasing competition with L’Oreal SA in China, the world’s fastest-growing major economy.
“Coty’s purchase will give our distributors confidence,” Guo in an interview at the Beijing offices of TJoy, which was founded in 1995 in the eastern Chinese city of Suzhou. “We will be able to sell some of the best products in the world and Coty can utilize TJoy’s extensive network in China.”
The Chinese company, which sells moisturizers, face creams and mud masks under the TJoy brand, has more than 500 distributors across China, he said. Coty will sell its products, including Adidas perfume and Rimmel cosmetics, in TJoy’s stores, Guo said.
Pure Plant Extract
TJoy sales this year will be about 1 billion yuan, little changed from 2009, said Guo, who is in charge of the Pure Plant Extract brand, a product developed by the two companies.
Coty’s involvement will help boost sales growth next year, with sales for the Pure Plant Extract brand forecast to hit 100 million yuan, he said. There are no plans to publicly sell shares, Guo said.
The companies entered into a share-purchase agreement, according to a Dec. 5 statement that didn’t disclose the value of the deal.
New York-based Coty agreed to buy nail-care company OPI Products Inc., according to a Nov. 29 statement. The perfume maker owned by Joh A. Benckiser SE is also buying beauty company Philosophy from private equity firm Carlyle Group and agreed to purchase German cosmetics firm Dr. Scheller Cosmetics AG. Financial terms for the acquisitions weren’t disclosed.
Founded in 1904 in Paris by Corsican-born Francois Coty, the company helped develop perfume into a mass product, with 36 million consumers two decades later, according to the company’s website.
Coty hired Baccarat glassmakers and other artists and artisans to design packaging and established ownership of flower fields, factories and printing plants. The company opened subsidiaries in New York and London in 1912 and now employs 8,500 people.
TJoy employs more than 7,000 people and has four factories in China, Guo said.
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