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November 26, 2009
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| LG Household & Health Care Ltd., Korea’s second-biggest cosmetics maker, rose to a record in Seoul trading after saying it will buy 90 percent of smaller rival The Face Shop for 420 billion won ($363 million) to expand. The shares climbed 5.2 percent to close at 283,000 won. LG Household will purchase a 70.2-percent stake from Shepherd Detachering BV, an affiliate of Affinity Equity Partners Ltd., and 19.8 percent from The Face Shop founder Jung Woon Ho, the company said Tuesday. Buying The Face Shop, Korea’s third-largest cosmetics company, will help close its gap with bigger rival Amorepacific Corp. “The acquisition may enable LG Household to strengthen its cosmetics business,” said Kim Mina, an analyst at Daewoo Securities Co., who has a “buy” recommendation on the stock. The Face Shop has a 5-percent share of the local cosmetics market, compared with LG Household’s 12 percent to 13 percent, according to a Nov. 18 report by Credit Suisse Group. Amorepacific has 35.5 percent of the market, Kim said. Amorepacific shares rose 2.9 percent to 892,000 won. Woori Investment & Securities Co. raised its target price on LG Household to 320,000 won from 290,000 won and maintained its “buy” recommendation, saying the acquisition price is lower than expected in a report today. “The acquisition is positive to the company’s fundamentals,” Sarah Yoon, a Woori analyst, said in the report. LG Household’s purchase came after talks between Hong Kong-based buyout fund Affinity and Carlyle Group collapsed in July last year. The Face Shop saw 33.5 billion won in profit last year on 235 billion won of sales. The company has 550 stores in Korea, selling only its products, and about 160 outlets overseas, according to Credit Suisse. Bloomberg |
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