How Analysts React To Colgate-Palmolive Acquisition

How Analysts React To Colgate-Palmolive Acquisition

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Colgate-Palmolive announced Thursday, July 11, the acquisition of the French group Laboratories Filorga for $1.69 billion to strengthen the segment of anti-aging care. Filorga is the leader in anti-aging in France and specifies that its medi-cosmetics creams are marketed in 75 countries in total, including a strong expansion in the Chinese market.

An entry point into the ‘travel retail’ distribution channel

“This acquisition also provides Colgate an entry point into the fast-growing distribution channel of travel retail, particularly in China,” said Colgate CEO Noel Wallace in a statement.

The American group, best known for its dental hygiene products, had already acquired the PCA Skin and Elta® brands in 2017 to gain a foothold in the high-margin skincare segment.

Filorga, revived by Didier Tabary, a Chanel alumni, and controlled by the HLD holding company, has boasted a growth of over 50% per year for more than 10 years thanks to its range of treatments formulated based on NCEF, a unique complex encapsulating assets used in injection.

A “transaction that fits into the development logic of Filorga”

“I am pleased to allow the Filorga brand to nurture new ambitions alongside Colgate: this transaction is part of Filorga’s development strategy and will enable the company to strengthen its position in existing markets such as China and expand into new territories with high potential, such as the United States or Japan,” said Didier Tabary in a statement released by HLD.

Colgate said the transaction, partially debt-financed, is expected to be finalized in the third quarter and will have no impact on the group’s earnings per share in 2019. Colgate was advised by Citi for this transaction, while Goldman Sachs and BNP Paribas were Filorga’s consulting banks.

According to analysts, this operation is a ‘good strategic adjustment’ for Colgate-Palmolive.

“Following the recent acquisitions of PCA Skin and Elta® in 2018, this agreement underscores Colgate’s interest in expanding its skin care portfolio,” said Jefferies.

Bank of America’s Olivia Tong also seems optimistic noting that this is its largest acquisition since buying Kolynos in 1995 and could support Colgate’s overall growth.

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I cover technology, utilities and biotechnology for Markets Morning, and I help out occasionally with other industry sectors. I've written about investment and personal finance topics for more than 20 years from a lowly copywriter to editor-in-chief, so I've done a little bit of everything. For what it's worth, I have a BA from Duke University and an MBA from Rollins College. I'm married with one daughter, and that's worth more than everything else put together.

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