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LG seeks to buy Elizabeth Arden

April 23, 2014

Koreans have their eyes on Elizabeth Arden cosmetics. (Newsis)

LG Household & Healthcare Wednesday said it is considering acquiring U.S.-based cosmetics company Elizabeth Arden as part of its efforts to expand its overseas business.

“Elizabeth Arden is one of the firms we are seeking to buy,” an official from LG Household & Healthcare said. “Mergers and acquisitions have been a big part of our business. We will grow our business through M&As.”

He said the company is yet to decide whether it should launch a formal bid to acquire Elizabeth Arden.

But industry sources said LG Household & Healthcare is in talks with local institutional investors to form a consortium to take over the U.S. company.

With news reports on the potential takeover, the stock price jumped by 3.13 percent to end at 495,000 won.

Since it acquired the Face Shop in 2010, LG Household & Healthcare has rapidly increased its presence in the overseas cosmetics market with the aim of growing as a global brand such as the Body Shop or L’Occitane.

LG seems to expect to create a synergy effect by acquiring the U.S. firm as it has now advanced into 120 countries.

The bidding price is estimated at about 1 trillion won including the premium for the management right, which would be the biggest deal for LG Household & Healthcare. Elizabeth Arden posted $1.34 billion in sales last year.

“LG Household & Healthcare has acquired small firms, disappointing investors,” said Iris Park, an analyst at Kiwoom Securities. “But the market responded positively as Elizabeth Arden is a big company. Although details about the takeover deal have not been confirmed, the acquisition would serve as a momentum to LG Household and Healthcare in its effort to tap into overseas markets.”

The market is also paying keen attention on whether LG Household and Healthcare will maintain its aggressive M&A move this year.

The firm’s vice-chairman Cha Suk-yong since his inauguration as CEO in 2005 has focused on expanding its businesses through a series of M&As. Successful takeovers have given Cha many nicknames such as “Midas of the M&A.”

The firm acquired 11 companies such as Coca Cola Korea Bottling, Diamond Water, Hankook Beverage, VOV, Everlife, TFS Singarpore and Fruits & Passion.

With a series of acquisitions, LG has completed a full lineup in its three business sectors ― beauty, healthcare and beverages, since it was founded as a kitchen detergent brand in 1947.

Industry sources said LG Household & Healthcare has secured a cash boost of about 200 billion won, which allows it to maintain a buying spree in the M&A market.