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Business deals

Shiseido sheds bareMinerals in sell-off of US beauty brands

American private equity firm Advent to buy three prestige cosmetics labels for $700m

A Shiseido store in Tokyo's Ginza district: The Japanese health and beauty group has sold off a number of assets in recent months. (Photo by Yuki Masuda)

TOKYO -- Japanese health and beauty group Shiseido said Thursday it will sell three high-end U.S. cosmetics brands to American private equity firm Advent International for $700 million.

All assets belonging to the brands bareMinerals, Buxom and Laura Mercier will be transferred to Advent by the end of the year. This sale marks a major milestone in Shiseido's restructuring push to jettison acquired brands mired in the red and focus resources on the growing skin care business.

Shiseido bought bareMinerals and Buxom in 2010 and Laura Mercier in 2016. Purchased for a combined $2 billion or so, they were positioned at the core of the company's overseas expansion. The brands account for nearly 5% of consolidated revenue.

Shiseido says it is examining how the sale will affect earnings this year.

The sale price is "bigger than expected and a positive," said Katsuro Hirozumi, senior analyst at Daiwa Securities.

Shiseido plans to allocate the proceeds from the sale toward research and development in skin care, as well as new acquisitions in the growth market of China and elsewhere in Asia.

The company had envisioned growth driven by brands geared toward the American and European markets, with bareMinerals, Buxom and Laura Mercier central to those plans.

But the burden of operating stores has increased amid the coronavirus outbreak, prompting Shiseido to close money-losing outlets. Its U.S. business logged an operating loss of 22.3 billion yen ($202 million) last year. Without an end to the pandemic in sight, the company saw no opportunity to swing operations back to the black soon.

The sale of the three American brands paves a path for U.S. operations to become profitable from 2022, according to a domestic securities analyst.

The Japanese company has embarked on a series of divestments after recording dismal financial results last year. In July, Shiseido completed the sale of its personal care business to European private equity firm CVC Capital Partners. The sale included the shampoo brand Tsubaki. In April, Shiseido said it terminated a licensing agreement with Italian fashion house Dolce & Gabbana.

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