PARIS – Swiss chemicals company Clariant has agreed to acquire Lucas Meyer Cosmetics, maker of high-value active and functional cosmetics ingredients, from International Flavors and Fragrances for $810 million.
The deal is equivalent to a 16.3-times multiple, based on Lucas Meyer Cosmetics’ earnings before interest, taxes, depreciation and amortization reported in August 2023. The transaction is expected to close in the first quarter of 2024.
“The proposed acquisition of Lucas Meyer Cosmetics marks another major step forward for Clariant’s purpose-led growth strategy. It will strengthen our position as a true specialty chemical company, our exposure towards consumer markets and our footprint in North America, while supporting our goal to accelerate customer- and sustainability-driven innovation,” Conrad Keijzer, chief executive officer of Clariant, said in a statement.
“In addition, Lucas Meyer Cosmetics brings a highly experienced leadership team with an excellent track record,” he continued. “By combining our personal-care ingredients portfolio with Lucas Meyer Cosmetics, Clariant will become a leader in the high-value cosmetic ingredients space, one of the most attractive, profitable and fastest-growing specialty chemicals markets. With this step, we will build on our successful track record of pursuing and integrating bolt-on acquisitions to enable value creation and profitable growth.”
IFF said in a separate statement that cash proceeds from the proposed transaction, net of taxes and expenses, is to be used to reduce outstanding debt.
“Consistent with our announcement during our second-quarter earnings, we are executing our portfolio optimization strategy to strengthen our capital structure,” IFF CEO Frank Clyburn said in the statement. “Aligned with our best-owner mindset, the proposed sale of our cosmetic ingredients business to Clariant will allow us to focus on our core businesses, maximizing growth and returns.
“We are convinced that Clariant is the best owner for the cosmetic ingredients business and with an ability to invest, will offer the business and our colleagues a bright future,” he added.
IFF acquired Lucas Meyer Cosmetics in 2015 for about 283 million euros.
IFF’s cosmetic ingredient business unit includes Lucas Meyers Cosmetics, founded in 1999 and based in Quebec, Canada, and IBR brands. It operates six research development and/or production sites worldwide and has approximately 195 employees. Over the past 12 months, the unit has had more than 2,900 customers in over 80 countries.
“Lucas Meyer Cosmetics represents a significant, exciting growth opportunity for care chemicals. It is a perfect fit with our business, given the complementarity of our customers and products,” said Christian Vang, president of the Clariant business unit care chemicals and the Americas region. “Combining our respective strengths, including the R&D and innovation capabilities of Lucas Meyer Cosmetics, backed by a strong brand, will enable us to deliver a strong increase in annual sales to $180 million in 2028 from around $100 million currently.”
Clariant said Lucas Meyer Cosmetics’ business is highly cash-generative, due to its asset-light model and outsourced production.
“In addition, Lucas Meyer Cosmetics has a unique customer-centric business model, resulting in strong brand recognition among customers around the world,” Clariant said.
The group noted that both it and Lucas Meyer Cosmetics have complementarity in their customer and product portfolio, geographic reach, and marketing and R&D capabilities.
The transaction should be accretive to Clariant’s earnings per share by mid-single-digits from the first year onward.