L ' Oréal disburses $ 843 million for Chinese manufacturer

L ' Oréal, the world's largest cosmetics maker, closed the purchase of Magic Holdings International, a Chinese manufacturer of facial masks for about 6.54 billion Hong Kong dollars (US $ 843 million) in cash to expand its operations in Asia.
L ' Oréal will pay 6.30 Hong Kong dollars by the Magic, according to informed the two companies yesterday in a joint statement. The price represents a premium of about 25% on the value of the last deal with Magic's shares before the acquisition, to 5.05 Hong Kong dollars. The action of the Hong Kong company will be traded today on the local stock exchange.
The Magic sales totaled € 150 million in 2012, according to a statement from L ' Oréal, which said that the facial masks are one of the fastest growing business segments, with "very promising development prospects". Last month L'oreal posted a growth in sales that fell short of market estimates, in the midst of its worst performance in North America in two years. In the Asia-Pacific region, however, sales rose 5.1% in the first half.
"The deal not only gives the L ' Oréal leadership in a category that has been growing a lot, but also gives the Magic Holdings 12,471 access points of sale in 23 provinces," said Chas Manso de Zuniga, an analyst at Societe Generale. "And also should allow L'oreal to accelerate the growth of its own brands in China through a major distribution network."
L ' Oréal, based in Paris, is paying 20 times the earnings before interest, taxes, depreciation and amortization (Ebitda) of Magic in 2012, according to estimates Zuniga. "L ' Oréal plans to develop its Chinese brand, contributing their scientific knowledge and using their advanced and applied research at its Center China & Innovation and Research around the world," the company said in a statement. L ' Oréal has 3,500 employees in China, a country where he began to operate in 1997.
BNP Paribas, who acted as a consultant for L ' Oréal, the French company offered a credit line of € 650 million to pay for the transaction, according to the statement sent to the regulatory authorities. The L ' Oréal said that the Board of Directors and shareholders of Magic representing 62% of the capital stock of the company gave its support to the business.