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FRANKFURT/PARIS (Reuters) - Germany's perfume and cosmetics retailer Douglas is nearing a deal to buy French peer Nocibe NOCBE.UL, a source with knowledge of the transaction said on Friday.
The deal would make the German group the second-biggest perfume chain in France behind LVMH-owned Sephora (LVMH.PA) and ahead of Marionnaud, which Nocibe currently trails.
Douglas and Nocibe, respectively owned by private equity firms Advent and Charterhouse CHCAP.UL, have agreed on an indicative price and financing, the French daily Les Echos said, suggesting a potential valuation for Nocibe of 500-550 million euros ($683.20-$751.52 million).
A source familiar with the talks told Reuters that Advent and Charterhouse were nearing a deal but declined to comment on valuation.
The source added that Douglas might shed some of its and Nocibe's stores because regulators would likely have competition concerns over such a deal.
A second private equity source said discussions between Nocibe and Douglas were active but noted that they were not exclusive. Private equity firm LBO France is also in the race, Les Echos wrote.
Advent, Douglas, Charterhouse and LBO France all declined to comment.
Speculation about a deal first surfaced in June when Douglas said it was making up to 500 million euros available to its perfumeries business as part of plans to grow internationally.
According to their respective websites, Nocibe has around 460 perfume stores in France and Douglas has over 180. Marionnaud has around 560 stores countrywide and Sephora around 300, but these tend to be larger than those of its rivals.
Additional reporting by Christoph Seitz and Nikola Rotscheroth in Frankfurt, Anjuli Davies in London; Writing by Natalie Huet; Editing by Philipp Halstrick and Elaine Hardcastle