CVC takes majority stake in Shiseido's personal care division

The target business – which includes haircare brand Tsubaki and skincare label Senka – will be spun off into a joint venture, with CVC holding 65% to Shiseido’s 35%.

Shiseido is a 150-year-old global beauty giant, with operations in 120 countries, although about 40% of its revenue comes from Japan and a further 25% from other markets in Asia. The company produces cosmetics, fragrances, and personal care products.

A handful of prestige brands – led by the eponymous Shiseido – account for nearly half of sales, relying on retail channels like department stores and specialty stores. The personal care contribution is only 9%. It is dominated by relatively low-price shampoo and skincare products, which are primarily sold through drugstores and general merchandise stores.

The transaction is a classic corporate divestment. Shiseido said in a filing that its priorities are to become a global leader in skin beauty by 2030 and to refocus on profitability and effective cash flow management rather than topline growth. Personal care doesn’t fit into this matrix, but at the same time, the business needs more investment in marketing to maximize its potential.

"Using our global network and experience, CVC is committed to making these strong brands even better. Specifically, we see significant potential for growth by investing further in employees, brands, and R&D, as well as by driving digitalization and accelerating overseas expansion, with the possibility of going public in the future," said Yukinori Sugiyama, CVC’s co-head of Japan, in a separate statement.

Shiseido recorded overall sales of JPY1.13 trillion in 2019, up from JPY1.1 trillion the previous year. Over the same period, net profit rose from JPY61.4 billion to JPY73.6 billion. Sales for the personal care division alone reached JPY105.6 billion in 2019, up 6% year-on-year.

Private equity investment in Japan reached $12.8 billion in 2020, up from $11.7 billion, with the buyout contribution relatively flat at $8 billion. There were seven deals of $500 million or more, including three $1 billion-plus buyouts. This compares to five and three, respectively in 2019.

The biggest buyouts of 2020 were Bain Capital’s take-private of care operator Nichii Gakkan, The Blackstone Group’s purchase of drug portfolio from Takeda Pharmaceutical, and KKR’s carve-out of Walmart’s Japan business. Much like CVC-Shiseido, the latter deal is structured as a partnership in which the private equity firm holds a majority stake.

CVC is currently deploying its fifth pan-Asian fund, which closed at $4.5 billion in early 2020. Recent activity in Japan includes acquisitions Riraku, massage chain, and Hitowa Holdings, a cleaning and care services. Hitowa – formerly known as Hasegawa Holdings – was sold to Polaris Capital Group in 2019 after a two-and-a-half-year holding period.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• North Asia
• Consumer
• Buyouts
• Japan
• CVC Capital Partners