Unilever to buy Korean firm for €2.27bn

Unilever agreed to buy a South Korean cosmetics maker for €2.27bn to gain a stronger foothold in the world’s fourth-largest skincare market, betting that the pop-culture-fuelled appeal of the country’s beauty products will outweigh concerns over regional tensions.

Unilever will buy Carver Korea, maker of AHC skincare products, from shareholders including Goldman Sachs and Bain Capital Private Equity, Unilever said. Carver had sales of €321m last year.

For the consumer-goods giant, whose brands include Ben & Jerry’s ice cream and Dove soap, the acquisition marks a shift from other recent purchases in niche areas like organic tea and vegan mayonnaise as chief executive Paul Polman pursues a commitment to sustainability.

The company has also been building up a “prestige” arm within its personal care business, targeting high-end brands founded in developed markets, such as Dermalogica, Ren and Murad.

Skincare sales in South Korea will reach €5.28bn this year, and interest in the Asian country’s cosmetics companies has been heating up. Bain Capital agreed to invest about €685m in beauty-products maker Hugel in April. AHC’s products include moisturisers, toners and sun protection.

Unilever shares were little changed. Korean cosmetics have grown popular in the Asia-Pacific region alongside a boom in the country’s cultural exports. Many of the leading brands, which compete with Japan’s Shiseido, Kose, and others, use Korean celebrities to front their advertising campaigns.

“The Korean Wave, driven by K-pop and TV series, created a desire among Asian consumers to look and feel like Korean celebrities,” said Sunny Um, a Singapore-based analyst at Euromonitor.

Fast Beauty Korean cosmetics companies have borrowed a page from fast-fashion brands like Zara, speeding up the product development cycle to keep a sense of freshness, Ms Um said.

They’ve also appealed to Chinese consumers by using herbal ingredients that are trusted in that country.

While strong Chinese demand has fuelled growth, sales in China have weakened recently amid geopolitical disputes in the region. Operating profit of Amorepacific, South Korea’s largest cosmetics company, dropped 58% in the second quarter.

Bloomberg