FRANKFURT (Reuters) - The German books-to-cosmetics retailer Douglas Holding is in exclusive talks to buy the French perfumery chain Nocibe from the private equity firm Charterhouse Capital, it said on Monday, in a deal that would make it France's second largest perfume seller.
Douglas, owned by the private equity firm Advent, has said it wants to expand its perfumes business, which it sees as having stronger growth prospects than its confectionery, jeweler or book stores.
Douglas CEO Henning Kreke said the French perfume market was worth more than 3 billion euros ($4.1 billion) a year.
"We've looked at buying Nocibe twice before and we've very happy that we're managing it at the third attempt with our new partner, Advent," Kreke told reporters.
Kreke and Advent managing director Ranjan Sen declined to comment on the value of the deal. Media reports last week suggested a valuation of between 500 million and 550 million euros for Nocibe.
With a combined 625 stores and 4,000 employees, the purchase would make Douglas the second largest perfumery chain in France in terms of revenue, behind LVMH's (LVMH.PA) Sephora and ahead of Marionnaud.
Planet Retail analyst Denise Klug said the Douglas concept would fit well in France, but that it would need to make its stores stand out.
"I think Sephora really is a fierce competitor. It managed to create a unique selling proposition by launching the latest retail technology instore and to perfectly link its in-store and online offerings," she said. "The chain is very popular with highly influential beauty bloggers."
Kreke said Douglas would look to use some of Nocibe's ideas in other countries, such as its beauty salon services, and try to boost online sales. There was no decision yet on whether to keep both the Nocibe and Douglas brands or merge them, he added.
The deal is subject to approval by the cartel authorities and the outcome of talks with labor representatives in France, Kreke said.
Douglas said in June it had 500 million euros available for the expansion of its beauty business but the managers said on Monday this was not a final amount.
"It doesn't mean it's 500 million and that's it," Sen said.
Kreke said Douglas would "continue to look for other opportunities, both within and outside Europe", but declined to be more specific.