Unilever’s beauty products pivot

Over the past few years the Anglo-Dutch multinational has worked on becoming less reliant on food sales and increasing its holdings in personal care and beauty products, which tend to have higher growth and margins. Unilever acquired the Zest and Camay brands from Procter & Gamble in 2015. That same year, the company built up its beauty and personal care prestige portfolio, adding higher-end cosmetics and skincare companies REN Skincare, Kate Somerville, Dermalogica and Murad. Now Unilever has agreed to pay $2.7 billion for South Korean cosmetics firm Carver Korea.

Owned jointly by Goldman Sachs, Bain Capital and founder Lee Sang-rok, Carver Korea is seen as the fastest-growing skincare business in South Korea through its popular AHC brand. Korean beauty brands have been in high demand throughout Asia for the past couple of years, attracting investors such as LVMH and Estee Lauder. The deal will also benefit Unilever by giving it Carver’s strong foothold in North Asia, currently the world’s largest skincare market.

“Unilever continues to build a portfolio of niche brands in premium beauty to capture opportunities in high-margin dynamic categories,” said analyst Ildiko Szalai of Euromonitor International. The South Korean beauty and personal care market has grown faster than the global average over the past five years, according to the London-based market research firm.

Bain Capital and Goldman Sachs bought just over 60% of Carver for about $500 million last year, which would have valued the company at $833 million as a whole. While this is less than a third what Unilever is paying, it is worth noting that Carver’s net profit quadrupled last year, from $32 million in 2015 to $117 million. Reuters reports that according to Unilever, “Carver’s 2016 sales were 321 million euros ($381 million) with core profit of 137 million euros. Based on that figure, Unilever paid 16.6 times EBITDA, in line with home and personal care deals over the past decade.”