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L’Oréal to buy China’s Magic Holdings for $843m

China is the third largest market for L’Oréal after the US and France.

French cosmetic group L’Oréal is planning to acquire the Chinese skincare firm Magic Holdings International for $843m, to expand its market presence in China, where demand for beauty products is surging.

Magic Holdings’ board of directors and its six major shareholders who own 62.3 per cent stake are supporting the deal.

The acquisition will see Magic’s best-selling MG brand join  L’Oréal. In addition, Magic’s experienced management and teams will become part of L’Oréal.

L’Oreal will offer HK$6.30 per share in cash to Magic, almost a quarter per cent over the last Magic’s trading price of HK$5.05 per share.

According to Euromonitor, sales of beauty and personal care product sales are set to grow by 8 per cent, touching $34bn by the end of fiscal 2013.

China with its 1.3 billion population is a huge market for beauty product makers. Magic with a 26.4 per cent market share in 2012 sells beauty products such as facial masks under the MG brand.

Listed on the Hong Kong Stock Exchange, Magic Holdings’ turnover was approximately €150m last year.

L’Oreal currently employs 3,500 people in China and operates a research and innovation center in Shanghai, apart from two plants in Suzhou and Yichang. China is considered to be the third-largest market for L’Oreal, after the US and France.

The acquisition will be closed only after the approval of the Chinese Ministry of Commerce.