L’Occitane Boss May Seek More Love for Skincare Chain in Europe

Austrian billionaire Reinold Geiger doubled sales at beauty-shop chain L’Occitane International SA over the past decade through clever marketing involving free samples and recurrent mailings to get consumers to buy the latest floral-scented skin creams.

(Bloomberg) — Austrian billionaire Reinold Geiger doubled sales at beauty-shop chain L’Occitane International SA over the past decade through clever marketing involving free samples and recurrent mailings to get consumers to buy the latest floral-scented skin creams.

The retailer now has 3,000 locations in 90 countries selling organic beauty products inspired by the lavender fields of southern France. What L’Occitane failed to achieve is sufficient recognition from investors. It lags well behind peers such as French cosmetics group L’Oreal SA, on the basis of its forward price-earnings ratio.

The lower valuation may be traced to the decision to hold an initial public offering in Hong Kong in 2010, a time when listings in the Asian hub were in vogue as companies sought greater exposure to China and its burgeoning consumer-goods market. Samsonite International SA and Prada SpA listed in Hong Kong the following year.

Geiger, who controls a majority stake, is now reconsidering that decision, Bloomberg reports. L’Occitane’s chairman has been discussing a possible offer of as much as HK$35 for the 30% of the shares traded on the market, which would value the beauty chain at about $6.5 billion, according to people familiar with the matter who asked not to be identified as the information is private. 

Deliberations are ongoing, and the eventual proposal could end up being slightly lower, the people said. Geiger may in turn re-list the Luxembourg- and Geneva-based company as soon as next year, hoping to gain attention from investors by choosing a European exchange.

A representative for L’Occitane didn’t immediately respond to a request for comment. Geiger also didn’t respond to queries. 

Geiger could announce a deal in coming days if he decides to move ahead, the people said. L’Occitane shares were suspended from trading before the Hong Kong market open on Wednesday, pending the release of an announcement.

L’Occitane wouldn’t be the only company reconsidering the wisdom of listing in Hong Kong. Italian fashion house Prada has been discussing a possible dual listing in Italy to garner more attention, although last month its chief financial officer, Andrea Bonini, played down the urgency of such a plan. 

“It is in our agenda,” Bonini said when he spoke to analysts during first-half earnings. “But we said from day one that it isn’t a priority for us at the moment.” 

Prospects that Paris could enhance its position as an international hub for consumer and luxury stocks received an added boost when US beauty firm Coty Inc. reached out to European investors last month as it explores a secondary listing in the French capital.

Read More: Coty’s Paris Road Show Fuels Prospects of Luxury Hub: ECM Watch

Hong Kong valuations have been sagging so much lately that even Chinese companies have been struggling to boost their valuations there. Chinese snack maker Dali Foods Group Co. received a take-private proposal from its controlling shareholder in June, and big-screen cinema company Imax Corp. is also seeking to take full control of its listed Chinese business. 

Read More: Take-Privates Fan Hong Kong M&A Revival Hopes

Geiger acquired a majority holding in L’Occitane more than two decades ago, and now controls more than 70% of the company, which was founded in France.

Bloomberg News first reported in July that Geiger was studying the possibility of taking the company private. The company confirmed its controlling shareholder reviews options from time to time, saying it hasn’t yet received any proposal to privatize or restructure the group.

–With assistance from Vinicy Chan, Manuel Baigorri, Angelina Rascouet and Alexandra Muller.

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