On April 25, LG Living Health, South Korea's second largest cosmetics group, announced that it would acquire 100% of New Avon, an American cosmetics and personal care company, for $125 million (about RMB 842 million). At present, Avon North America has signed an acquisition contract with Japanese company 'Ginza Stephanie' (100% stake in LG Living Health), which is expected to be completed by the end of September this year.
LG Life Health said it hoped to open up the North American market through the acquisition. 'The United States is the world's largest cosmetics and health food market, with a market size of more than 50 trillion won (about 289.5 billion yuan). LG Living Health will take the US market as a bridgehead to enter Canada, South America and even Europe to expand the company's global influence. Avon (Avon Group North America business) has a 100% stake. At present, Avon North America has signed an acquisition contract with Japanese company 'Ginza Stephanie' (100% stake in LG Living Health), which is expected to be completed by the end of September this year.
Avon split its North American and overseas businesses in 2016 and set up an independent company for North American business, New Avon, which is mainly aimed at the markets of the United States, Canada and Puerto Rico. Its sales in 2018 are about 4.064 billion yuan RMB. LG Life Health said that after the acquisition, Avon will 'add some ingredients' - introducing new R&D and product marketing lines to upgrade its brand.
In April last year, LG Lifestyle acquired 100% of Avon Japan for 609 million yuan in order to increase its share of the mail order market in Japan. On January 8 this year, the Face Shop, LG's health subsidiary, announced the acquisition of all shares of Avon's makeup and care manufacturing unit in Guangzhou, China.
In one year, three acquisitions in a row, where is LG's healthy life?
According to the latest LG Living Health report, LG Living Health sales grew for 54 consecutive quarters in the first quarter of 2019, reaching 1.9 trillion won ($11.333 billion), while its operating profit grew for 56 consecutive quarters, reaching 322 billion won ($1.87 billion), both of which reached record highs. The rising performance clearly provides the backing for its 'big swing'.
Earlier this year, Avon announced plans to lay off employees and reduce inventory, aiming to boost product mix and focus on consumer demand through internal restructuring. With the Group's CEO taking office last year, Avon proposed the strategy of 'Open Up Avon', trying to glow brand vitality with new technology, new business model, new partners, new category potential, and promote performance growth.
As Avon North America's acquisition dust settles, Avon Group has been rumored to be acquired by Brazilian cosmetics group Natura & Co, or will soon unravel the mystery.
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