Business Deal Clariant to Acquire Lucas Meyer Cosmetics for 810 Million Dollars

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Clariant has plans to take over the leading provider of high value ingredients for the cosmetics and personal care industry Lucas Meyer Cosmetics from International Flavors & Fragrances. The deal is expected to strengthen Clariant’s position as a specialty chemical company and its footprint in North America.

Muttenz/Switzerland – Clariant has agreed to acquire Lucas Meyer Cosmetics, a leading provider of high value ingredients for the cosmetics and personal care industry, from International Flavors & Fragrances (IFF) for a total cash consideration of 810 million dollars on a debt-free, cash-free basis, equivalent to an EV/ reported Ebitda multiple (LTM August 2023) of 16.3x. The proposed transaction is subject to regulatory approvals and customary closing conditions and is expected to close in the first quarter of 2024.

Lucas Meyer Cosmetics, founded in 1999 and headquartered in Québec, Canada, is a leading player in the high value active and functional cosmetic ingredients market. Lucas Meyer Cosmetics’ competitive edge stems from its superior marketing and innovation capabilities, including global R&D and regional application centers, which translate into strong financial performance with 100 million dollars of revenues and highly attractive profitability. The business is also highly cash generative due to its asset-light model and outsourced production. In addition, Lucas Meyer Cosmetics has a unique customer-centric business model, resulting in strong brand recognition among customers around the world.

Strong strategic and financial rationale

The acquisition is underpinned by a compelling strategic rationale given Clariant’s and Lucas Meyer Cosmetics’ complementarity in customer portfolio, product portfolio, regional strongholds and capabilities in R&D and marketing, making the combination of Clariant and Lucas Meyer Cosmetics a uniquely positioned solutions provider for high value personal care brands.

The proposed transaction allows Clariant to further transform its portfolio towards high-growth, high-margin and highly cash generative specialty chemicals businesses and consumer end-markets underpinned by accelerating demand for natural and sustainable products. It will increase Clariant’s exposure to the active and functional cosmetic ingredients market and strengthen its North America presence in the Care Chemicals business unit.

The transaction will create considerable value for Clariant’s shareholders. With ~ 10 % sales growth, outstanding profitability and high cash conversion, Lucas Meyer Cosmetics is accretive to Clariant’s growth, margin and cash flow profile and exceeds Clariant’s financial target metrics for 2025. The transaction is expected to be mid-single digit percentage accretive to EPS from year one onwards. Given the strong strategic fit and high complementarity of the businesses, Clariant’s ambition is to grow Lucas Meyer Cosmetics’ annual sales from ~ 100 million dollars to ~ 180 million dollars by 2028.

Financing and expected timetable

The funding for the acquisition has been secured by a fully committed bridge facility which is intended to be refinanced soon after completion. On completion, Clariant’s net leverage is expected to moderately increase to ~ 2.8x times Ebitda including pension and lease liabilities, preserving the Group’s prudent capital structure and balance sheet strength. Clariant expects no change to its investment grade credit rating.

The acquisition is expected to close in the first quarter of 2024.

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