(Bloomberg) — L’Occitane International SA’s billionaire owner Reinold Geiger is nearing a deal to take the skin-care company private with funding help from Blackstone Inc., people familiar with the matter said, potentially ending its 14-year run on Hong Kong’s stock exchange.
The world’s largest alternative asset manager may provide debt financing for the buyout, the people said, asking not to be identified as the information isn’t public. An announcement may come in the coming days, they said. Trading of L’Occitane was suspended in Hong Kong on Tuesday, pending an announcement related to takeover codes. The stock closed at HK$29.50 on Monday.
Geiger is considering offering a 20% premium over HK$26 a share, the stock price before Bloomberg News first reported on a potential take private deal involving Blackstone on February 6, the people said. Geiger has lined up financing for the deal, the people said.
While deliberations are at an advanced stage, no final decisions have been made and talks could still be delayed or even fall apart, the people said. A representative for Blackstone declined to comment, while L’Occitane referred requests for comment to its regulatory statement earlier on Tuesday.
L’Occitane has a market value of about HK$43.6 billion ($5.6 billion). A vehicle ultimately controlled by L’Occitane Chairman Geiger owns more than 70% of the company, exchange filings show.
Geiger’s renewed push to take the global cosmetics firm private represents the strongest indication yet that a succession plan is underway.
If the 76-year-old Geiger succeeds, it will cap a tumultuous period for the company. He gave up his role as chief executive officer in 2021 to Andre J. Hoffmann, his business partner for nearly 30 years. Then, in January, Geiger announced Hoffmann will be replaced in April by a new CEO who previously worked at LVMH.
Two of Geiger’s three sons are in senior management positions at the company. Geiger, who rarely talks to the press, raised the possibility in a 2012 interview that they might not end up running the company.
L’Occitane was founded in 1976 by Frenchman Olivier Baussan, who started out making essential oils from plants like lavender in the Provence countryside and selling them at local markets. Geiger became a minority shareholder in 1994, but has said the company’s poor performance prompted him to start working there in a bid to safeguard his investment.
He expanded L’Occitane globally, saying he decided to move into Asia after being impressed by the region’s work ethic. Initially, the strategy went so badly that his auditor warned the poor results could put the whole company in jeopardy. The retailer was listed in Hong Kong in a 2010 initial public offering and now has eight brands and some 3,000 locations in 90 countries. Yet it earns only about one-third of its revenue in Asia, while the Americas is its fastest growing region.
L’Occitane is facing an increasingly challenging market in China, where global brands such as L’Oreal SA and Estee Lauder Cos. are rolling out frequent discounts to compete for a larger market share, and where domestic brands are rising on the back of nationalism.
While China was the brand’s top market by sales in financial years 2021 and 2022, it was surpassed by the US last year. The group has also seen declining profits in recent years. In the financial year through March 2023, L’Occitane’s profit plunged 51% from a year earlier, while in the six months through September, profit fell 38%.
–With assistance from Manuel Baigorri and Shirley Zhao.
(Updates with Geiger’s sons’ roles in eighth paragraph.)
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