Estée Lauder to buy The Ordinary owner DECIEM in two-step deal
The Estée Lauder Companies (ELC) is to up its stake in the Canadian-based DECIEM Beauty Group, owner of the cult skincare brand The Ordinary, from 29% to approximately 76%.
The agreement, which is expected to close in the quarter ending 30 June 2021, will then see ELC buy the remaining interests in three years.
Known as “The Abnormal Beauty Company”, DECIEM was founded in 2013 by the late Brandon Truaxe, who developed the company alongside founder Pasquale Cusano and co-founder Nicola Kilner, who now leads DECIEM as chief executive officer.
Commenting on the deal, ELC president and chief executive officer Fabrizio Freda said: “Over the last four years, we have built a truly special long-term partnership with the incredible DECIEM team, and we are excited for what the future holds.
“DECIEM is an exceptional company. Nicola and her team have built and cultivated authentic brands with highly effective, must-have products using a vertically integrated model, and have fostered a uniquely transparent and engaging communication style.
“The company’s hero products, desirable innovation, and digital- and consumer-first high-touch approach have been instrumental to its success.”
Since ELC’s initial investment in June 2017, DECIEM has grown rapidly, achieving net sales for the 12 months ended January 31, 2021, of approximately USD $460 million.
The amount to be paid by ELC at closing is approximately USD $1.0 billion, reflecting a total enterprise value of approximately USD $2.2 billion for the First Phase.
The purchase price for the remaining interest in the Second Phase will be determined based on the future performance of DECIEM.
Commenting on the deal, Euromonitor global lead for health and beauty Irina Barbalova, said: "At a time when prospects for the masstige segment are becoming more lucrative and price sensitivity has become more prominent as a result of the pandemic, the beauty industry is likely to see more and more prestige players diversify and expose their brand portfolio to brands across the whole price spectrum and those targeting a more varied consumer base.
"DECIEM’s The Ordinary has been one of the front-runners in the area of ingredient transparency and education, which instils greater credibility in product efficacy and perceptions of higher quality, while not at the expense of a higher price tag.
"Such attributes will be increasingly sought after as consumers aspire to result-driven solutions and more simplified and ingredient-led narratives, spearheaded by other investment targets such as Versed (LVMH) and The Inkey List."
