[Asia Economy Reporter Yujin Cho] LG Household & Health Care has acquired the Asian and North American business rights of the European derma cosmetics brand Physiogel. LG Household & Health Care, which has been striving to diversify its business through mergers and acquisitions (M&A), has successfully completed a total of 24 M&As over the past 14 years. This acquisition ranks as the third largest in the cosmetics sector to date.
On the 20th, LG Household & Health Care signed a contract to acquire the Asian and North American business rights of Physiogel, a leading European derma cosmetics brand, from the global pharmaceutical company GlaxoSmithKline (GSK) for 192.3 billion KRW. Both parties plan to finalize the acquisition within the first half of the year after agreeing on detailed acquisition terms.
Physiogel is a brand launched in 2000 by the German dermatology specialist company Stiefel and was acquired by GSK in 2009. Currently, it operates mainly in Southeast Asia?including Hong Kong, Thailand, and the Philippines?as well as Europe and South America. Its global sales amount to approximately 110 billion KRW (as of the end of 2018), with the Asian market accounting for more than 60% of total sales. Among individual countries, the Korean market holds the largest sales share at around 30%, followed by Hong Kong and Thailand.
LG Household & Health Care plans to expand its business in the United States, Japan, and China?markets where it has not yet entered?by utilizing local subsidiaries. The company stated, "In the North American market, we will leverage distribution channels such as Sephora and Ulta, with which we have business relationships, as well as our own distribution network Avon. In Japan, we plan to utilize key channels such as direct sales and home shopping."
Additionally, in China, where entry has been hindered due to animal testing requirements for imported cosmetics, LG Household & Health Care intends to actively use its Guangzhou factory to produce products locally and sell them through channels like Watsons.
LG Household & Health Care aims to strengthen its derma cosmetics and personal care portfolio through this acquisition. Derma cosmetics is a rapidly growing sector worldwide, and LG Household & Health Care has previously succeeded in developing the Cha & Park Cosmetics brand?acquired in 2014?into a mega brand with annual sales exceeding 100 billion KRW (as of the end of 2019).
LG Household & Health Care’s derma cosmetics brands include Cha & Park, Dr. Belmeur, Carezone, Derma Lift, and Taeguk Pharmaceutical (Dominas Cream), which was acquired in 2017.
Over the past 14 years, LG Household & Health Care has completed 24 M&As, including last year’s acquisition of 100% equity in New Avon, a U.S. cosmetics and household goods distributor, for 147.6 billion KRW. Starting with the acquisition of Coca-Cola Beverage in 2007 for 352.1 billion KRW, the company has diversified its business sectors beyond cosmetics to household goods and food and beverages by acquiring Diamond Spring Water (11.2 billion KRW) in 2009 and Korea Beverage (14.3 billion KRW) in 2010.
This acquisition of the European derma cosmetics business rights ranks as the third largest M&A in the cosmetics sector, following last year’s acquisition of New Avon and the 2013 acquisition of 100% equity in Everlife for 307.6 billion KRW.
An LG Household & Health Care official stated, "We plan to nurture Physiogel into a global leading derma brand by leveraging our in-house research and production capabilities as well as our global network."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
