Consumer deal fever hits Johnson & Johnson with $2.1B deal to buy out Japan's Ci:z
Add another Big Pharma company to the wheeling and dealing in consumer health: Johnson & Johnson is shelling out to take full control of Japanese cosmetics and skincare specialist Ci:z.
J&J plans to pay 230 billion Japanese yen ($2.05 billion) in cash to acquire the share of Ci:z it doesn’t already own, gaining several lines of medical cosmetic products in the process, including Dr.Ci:Labo, Labo Labo and Genomer.
The deal will give J&J’s skincare franchise—which already sells such popular brands as Neutrogena—additional heft in Japan and other Asian markets.
Ci:z will bolster J&J's offerings “by bringing in an agile innovation model and rapidly accelerating sales through our global commercialization expertise,” said J&J consumer chief Jorge Mesquita in a statement. The company depicts the transaction as a “springboard” to building its commercial capabilities “by leveraging one of the largest customer relationship management databases for direct-to-consumer skincare in Japan.”
Through its affiliate Cilag, the U.S. Big Pharma acquired 19.9% of the Japanese company in 2016—the same year it took over New Jersey-based dermocosmetics firm NeoStrata—and got exclusive ex-Japan rights to those Ci:z skin care products.
Now, to devour the entire company, J&J is offering 5,900 yen per share, which represents a 55% premium over Tuesday’s closing price. The monetary size of the deal matches up to what J&J will glean from selling its diabetes monitoring unit LifeScan to a private investment firm. J&J said it would launch the Ci:z tender offer Oct. 29 and hopes to complete the deal in the first half of 2019.
Beauty products have recently been a major driver of J&J’s consumer growth as its baby care franchise suffers from competition. For 2017, J&J’s beauty brands surpassed its over-the-counter drug segment to deliver $4.2 billion in worldwide sales, a jump of 7.8% from the previous year. Dr.Ci:Labo was at that time cited as a key sales contributor.
The trend has continued so far in 2018, as beauty products turned in $2.2 billion in sales in the first six months, once again “primarily driven” by the strength of Dr.Ci:Labo and by the group's international expansion.
Western firms recognize the huge skincare business opportunity Asian countries embody, given South Korea’s and Japan’s well-recognized strength in the area and a potentially huge market in China.
Last September, Unilever announced that it would acquire South Korean skincare firm Carver Korea for €2.27 billion ($2.7 billion). Allergan just last month said it would build its very first Medical Aesthetics Innovation Center in China, hoping to spearhead a big push into the country.
The J&J-Ci:z deal also comes amid a torrent of consumer health change-of-hands initiated by Big Pharmas. Bristol-Myers Squibb was recently reported to be reviewing a sale of its French OTC business, eyed by potential buyers including German generics maker Stada. Trying to focus on innovative medicines, Novartis recently handed GlaxoSmithKline its stake in a consumer joint venture with the British pharma. And a bidding war is brewing for GSK’s Indian consumer business, which includes the popular nutritional drink Horlicks.
Oct 23, 2018
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