Estee Lauder to Pay $1 Billion for Most of Deciem Skin Care
(Bloomberg) -- Estee Lauder Cos. agreed to pay $1 billion to boost its stake in Deciem Inc., giving the Canadian skin-care company an enterprise value of $2.2 billion as the cosmetics giant moves toward a full takeover.
Estee Lauder will raise its stake in Deciem to 76% from 29% with the deal, which it expects to close in the quarter ending June 30, the New York-based company said in a statement Tuesday. Estee Lauder agreed to buy the rest of Deciem after three years.
Deciem had sales of $460 million in the year ended Jan. 31, Estee Lauder said, describing the company as “an industry disruptor with a consumer-focused approach.”
Brandon Truaxe, who died two years ago at the age of 40, founded Deciem in 2013. The Toronto-based company attracted a cult following, including Kim Kardashian, after launching The Ordinary, a line of products with familiar ingredients priced at under $10. Estee Lauder invested an undisclosed amount in the company in 2016 and its portfolio grew.
A couple of months before he died, Truaxe told staff that he was shutting down Deciem until further notice, citing “major criminal activity” by employees. Estee Lauder took legal action against Truaxe. An Ontario judge ousted him as chief executive officer and forced him from Deciem’s board.
There was no hint of that past rancor in the Tuesday statement. “Brandon dreamed of ELC being the forever home for Deciem, and we are truly humbled to achieve his vision today,” said co-founder Nicola Kilner, the current CEO.
Skin care continues to be the growth driver for Estee Lauder as makeup sales shrink, accounting for 58% of the company’s revenue in its most recent quarter. Shoppers have gravitated toward self-care items like moisturizer and serums but have seen little need for foundation and lipstick as coronavirus restrictions keep them at home.
Estee Lauder shares were down 0.2% to $284.95 at 9:39 a.m. in New York. They are up 7.1% this year and gained 29% last year.
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