Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
L’Oréal has acquired a 10 per cent stake in newly listed dermatology company Galderma, in a move that takes the beauty group back into the market for anti-wrinkle injectables and fillers after 10 years in traditional cosmetics.
The French beauty company acquired the stake for an undisclosed sum from a consortium led by Swedish private equity group EQT. The consortium, which has owned Galderma for five years, recently took the company public and remains a shareholder.
Nicolas Hieronimus, chief executive of L’Oréal, said the deal “allows us to explore partnering in the fast-growing aesthetics market, a key adjacency to our own pure beauty play”.
Galderma, which sells everything from acne treatments to aesthetic injectables and fillers designed to eliminate wrinkles and alter facial features, said it had formed a scientific partnership with L’Oréal to develop anti-skin ageing technologies.
Analysts estimate the stake to be worth €1.7bn.
Based in Zug, Switzerland, Galderma was established in 1981 as a joint venture between Nestlé and L’Oréal. In 2014, Nestlé bought out L’Oréal’s 50 per cent stake, and the company was acquired by the consortium led by EQT for $10bn in 2019.
“L’Oréal is moving left-field [with] beauty tech/devices and now injectables, in a notable shift away from traditional cosmetics, perhaps a sign of a view on the future of the beauty wallet,” wrote Molly Wylenzek, analyst at Jefferies, adding that L’Oréal probably took the stake with a view to “higher ownership and control over time”.
L’Oréal shares were down 1 per cent in early trading on Monday, amid broader turbulence in global stock markets. The deal comes after Galderma’s investors, which also include the Abu Dhabi Investment Authority and Singapore’s GIC, took the company public in Switzerland in March.
The initial public offering for Galderma raised about SFr2.3bn ($2.7bn) at a price of SFr53 a share. Most of the proceeds from the IPO were intended to repay and refinance Galderma’s debts.
Shares in the company have since risen to about SFr67. Galderma’s market capitalisation is roughly SFr16bn.
About half of Galderma’s annual sales are in its injectable aesthetics products, according to Bernstein, with the rest derived from skincare brands such as Cetaphil and prescription drugs for skin conditions. Galderma generated more than $4bn in net sales in 2023.
Since becoming chief executive in 2021, Hieronimus has carried on the group’s appetite for acquisitions with bigger coups such as a $2.5bn deal for luxury skincare brand Aesop last year, and has said the group could do more.
Buying into the fast-growing injectables market positions L’Oréal well to benefit from the two big trends in beauty markets, medicalisation and premiumisation, said Bruno Monteyne, analyst at Bernstein. “Most of L’Oréal’s market outperformance comes from the mix being in the right place at the right time. Injectable aesthetics are the fastest growing area of beauty, hence the logic,” he said.
L’Oréal has begun to feel the pressure from slowing demand in its key Chinese market, with sales of cosmetics and skincare products there falling in the second quarter.
In the period, its dermatological unit, home to brands often found in pharmacies such as CeraVe, la Roche-Posay and SkinCeuticals, also underperformed analysts’ expectations with slowing sales growth, after several years in which it drove earnings at the company.
