(Adds background, market size, bylines)
By Ludwig Burger and Martinne Geller
FRANKFURT/LONDON, June 2 Germany's Henkel
will buy three U.S. hair care companies for 270
million euros ($370 million) in cash as the household products
and industrial glues maker aims to strengthen its business with
Henkel, which already owns Schwarzkopf hair products, said
the three brands - SexyHair, Alterna and Kenra - have annual
sales of about 140 million euros, mostly through hair salons.
Henkel has been on the lookout for deals for some time,
having saved up a 4 billion euro ($5.5 billion) war chest for
purchases but suitable targets have been elusive.
The three brands are being sold by private equity firm TSG
Mergers in the beauty industry have been relatively quiet in
recent months compared to the food and drink sectors, though
large deals have included L'Oreal's acquisition in
April of Chinese facial mask brand Magic Holdings for about $845
million and Revlon Inc's $665 million buy of Spanish
salon hair care products firm The Colomer Group in October.
Hair care, cosmetics and body care brands are attractive
because of their high margins, and are growing faster than
packaged food brands, helped by their exposure to emerging
Henkel, which already has salon-exclusive hair care brands
such as Igora and Osis as well as retail brands including Syoss,
agreed to pay about 1.9 times annual sales for the businesses,
more than Revlon's multiple of about 1.2 times sales for
The global hair care market, worth $77 billion, is expected
to grow by 6.6 percent per year on average until 2018, according
to market researcher Euromonitor International.
"The acquisition will position Henkel as one of the leading
companies in the world's single biggest hair professional
market," Henkel said in a statement. It declined to disclose
earnings figures for the assets.
The family-controlled German group is a distant No.4 in the
global hair care market after Procter & Gamble, L'Oreal
Henkel derived about 15 percent of group sales from hair
care in the first quarter. It gets almost half its revenue from
industrial adhesives following the 3.7 billion euro acquisition
of National Starch in 2008.
($1 = 0.7328 Euros)
(Editing by Jane Baird and Louise Heavens)