Henkel CEO Rorsted Says No Sense in Beiersdorf Asset Exchange

Henkel AG Chief Executive Officer Kasper Rorsted denied that the owner of Schwarzkopf hair-care products may seek to gain Beiersdorf AG’s adhesives business in exchange for one of his cosmetics brands.

Such an asset swap “would not make sense” as Henkel is already the world’s biggest adhesives company, Rorsted said at the World Economic Forum in Davos, Switzerland on Jan. 22. Henkel, based in Dusseldorf, has “a very strong cosmetics business that we are very happy with.”

Speculation that Henkel and Beiersdorf may exchange some assets has been around since about 2006, according to Sebastian Frericks, an analyst at Bankhaus Metzler in Frankfurt. Henkel got about 50 percent of 2011 revenue, or 7.75 billion euros ($10.4 billion), from adhesives. Beiersdorf’s adhesives unit represented about 17 percent of sales, or 937 million euros.

“You can see some synergies between the two adhesives businesses and a rationale behind Henkel owning both,” Frericks said. “At this point of time, it might not make sense for Henkel to double down in the cyclical business considering its good position. Henkel has also turned around its cosmetics business pretty significantly.”

Henkel gets about 22 percent of revenue from cosmetics, including the Schwarzkopf brand. Most of the rest comes from adhesives and home-care products including Persil detergent.

Henkel’s priority is to invest cash in the business, Rorsted said, adding that the company will only consider share buybacks once investment opportunities have been exhausted.

Cosmetics brands including Nivea, La Prairie and Eucerin skin creams represented more than 80 percent of Beiersdorf’s 6.04 billion euros of revenue last year.

Sven Jacobsen, a spokesman for Beiersdorf, said the company declines to comment on market speculation.

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