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AMM 176: L’Oreal Invests in Galderma’s Anti-Aging Innovations
August 21, 2024
This episode delves into L’Oreal SA’s recent announcement of acquiring a 10% stake in the Swiss company Galderma Group AG for approximately $1.9 billion. Listeners will gain insight into how this strategic acquisition aims to enhance L’Oreal’s dermatological beauty division by developing innovative skincare products, particularly those targeting signs of aging. The episode also discusses market reactions, the history of Galderma, and the financial mechanics of the deal, concluding with the strategic implications for both companies.
Quick Takes
- L’Oreal SA is purchasing a 10% stake in Galderma Group AG, a Swiss company known for its injectable skin fillers and brands like Cetaphil.
- The acquisition involves around 1.6 billion Swiss francs or $1.9 billion and aims to boost L’Oreal’s dermatological beauty division through developing innovative skincare products targeting signs of aging.
- Market reactions to the deal have been mixed, with Galderma’s shares spiking and L’Oreal’s shares dipping, but analysts are optimistic about potential synergies between the companies.
Episode Transcript
Today is August 21, 2024. Recently L’Oreal SA announced it is purchasing a 10% stake in Galderma Group AG, a Swiss company known for its injectable skin fillers and brands like Cetaphil. This strategic move, amounting to roughly 1.6 billion Swiss francs or $1.9 billion, involves an undisclosed premium and underlines L’Oreal’s aim to boost its dermatological beauty division.
This acquisition forms part of a broader agreement between the two companies to develop innovative skincare products targeting signs of aging, leveraging a scientific partnership. L’Oreal’s dermatological segment, already its most profitable and fastest-growing unit, saw like-for-like sales jump 16% in the first half of this year. This deal aligns with L’Oreal’s strategy to expand its influence across the beauty sector.
Market reactions have been mixed; Galderma’s shares spiked by up to 7.8%, defying a general market downturn, whereas L’Oreal’s shares dipped by 1.9% in Paris. Despite this, analysts are optimistic about potential synergies between the companies, noting L’Oreal’s consistent focus on boosting its operational footprint.
Interestingly, Galderma has a storied history, initially founded as a joint venture between L’Oreal and Nestle in 1981. Following a series of ownership changes, Galderma’s IPO in March marked Switzerland’s largest in twenty years.
The deal will be funded through L’Oreal’s cash reserves and credit lines, with completion expected soon. Notably, L’Oreal will not seek any board seats at Galderma, underscoring the strategic nature of this investment without pushing for direct control.
