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Estee Lauder boosts its stake in Canadian skin care firm Deciem for $1bn

The cosmetics company will raise its stake in Deciem to 76% from its current 29% holding

An Estee Lauder store in Beijing, China. The cosmetics firm first invested in Deciem in 2016 and have gradually raised its stake. Getty
An Estee Lauder store in Beijing, China. The cosmetics firm first invested in Deciem in 2016 and have gradually raised its stake. Getty

Estee Lauder Company agreed to pay $1 billion to boost its stake in Deciem, giving the Canadian skin-care company an enterprise value of $2.2bn as the cosmetics giant moves toward a full takeover.

Estee Lauder will raise its stake in Deciem to 76 per cent from 29 per cent with the deal, which it expects to close in the quarter ending on June 30, the New York-based company said in a statement Tuesday. Estee Lauder agreed to buy the rest of Deciem after three years.

Deciem had sales of $460 million in the year ended January 31, Estee Lauder said, describing the company as “an industry disruptor with a consumer-focused approach”.

Brandon Truaxe, who died two years ago at the age of 40, founded Deciem in 2013. The Toronto-based company attracted a cult following, including Kim Kardashian, after launching The Ordinary, a line of products with familiar ingredients priced at under $10. Estee Lauder invested an undisclosed amount in the company in 2016 and its portfolio grew.

A couple of months before he died, Mr Truaxe told staff that he was shutting down Deciem until further notice, citing “major criminal activity” by employees. Estee Lauder took legal action against Mr Truaxe. An Ontario judge ousted him as chief executive and forced him from Deciem’s board.

There was no hint of that past rancor in the Tuesday statement. “Brandon dreamed of ELC being the forever home for Deciem, and we are truly humbled to achieve his vision today,” said co-founder Nicola Kilner, the current chief executive.

Skin care continues to be the growth driver for Estee Lauder as makeup sales shrink, accounting for 58 per cent of the company’s revenue in its most recent quarter. Shoppers have gravitated toward self-care items like moisturizer and serums but have seen little need for foundation and lipstick as coronavirus restrictions keep them at home.

Estee Lauder shares were down 0.2 per cent to $284.95 at 9.39 am in New York. They are up 7.1 per cent this year and gained 29 per cent last year.

Published: February 24, 2021 08:30 AM

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