Neil DennisUnilever, the Anglo-Dutch household products group, announced on Monday it was to buy Carver Korea for €2.27bn (£2bn) as it seeks to raise its exposure to the fast-growing Asian cosmetics market.
Carver makes skin care products, including hydration creams and face masks, and is a manufacturer of so-called "K-beauty" products that use only natural ingredients.
Korean cosmetics market
South Korea is one of the fastest-growing cosmetics markets and is already the fourth-largest skin-care market in the world.
Meanwhile, the rising popularity of K-beauty, which involves elaborate therapies and lotions for the creation of facial and skin care regimens, is spreading quickly around the world, particularly in the US and China.
The growing trend of K-beauty: Korean women hold the record for most cosmetic products used in a day - Source: PA ImagesIndeed, investors have already started to take notice. In April private equity group Bain Capital – which currently holds a stake in Carver – invested $816m in Hugel, the South Korean biopharma group.
Unilever deal
Unilever has agreed to buy Carver Korea from the company founder, and Goldman Sachs and Bain Capital, which jointly invested $380m last year for an 80% stake.
Alan Jope, president of Unilever's personal care unit, said the acquisition was "completely aligned" to the company's personal care strategy.
"It will significantly strengthen our position in North Asia, the largest skincare market in the world," he added.
Market reaction
ING maintained its buy rating and €62 price target on the stock, which represented a near 21% premium on Friday's closing price.
Analyst Reg Watson expressed some concern over the price paid, which is 16.6 times 2016's core earnings, but acknowledged the growing importance of the Korean skincare market as "one of the most developed and fastest growing in the world".
He added: " Korean women hold the world record for the number of cosmetics products used in a day (13.4) and Korean men also have the distinction of spending the most on men’s skincare globally, representing 20% of the total global male skincare expenditure.
"Carver has become the fastest-growing skincare business in South Korea, through sales of its brand, AHC."
In mid-morning trade, Unilever's London-listed shares were up 0.2% at £42.72, while the Amsterdam-listed stock rose 0.8% to €49.50.