$45 billion cosmetics giant L'OCCITANE officially delists, revenue growth without profit increase in the 2024 fiscal year

According to the financial news app Zhitong Finance, on September 13th, the French beauty brand L'OCCITANE (00973) announced its official delisting from the Hong Kong Stock Exchange, ending its 14-year listing journey. The last financial report released before delisting showed that L'OCCITANE's net sales increased in the 2024 fiscal year, but "increased revenue did not lead to increased profits." On the last trading day before delisting, L'OCCITANE closed at HKD 33.7, with a total market value of approximately HKD 49.7 billion, equivalent to about RMB 45 billion. In a statement prior to delisting, L'OCCITANE mentioned that delisting would provide the group with flexibility to make long-term business decisions.

The Chairman of the group, Reinold Geiger, proposed to acquire the remaining L'OCCITANE shares at a price of HKD 34 per share, with the transaction valued at approximately EUR 6 billion (about RMB 47.2 billion). Blackstone and Goldman Sachs Alternative Investments provided a commitment of EUR 1.551 billion (about RMB 12.2 billion) in funding support for the privatization of L'OCCITANE.

It is understood that in 2010, L'OCCITANE Group was listed on the main board of the Hong Kong Stock Exchange, becoming the first French company to be listed in Hong Kong. With the rise of domestic e-commerce channels, in the 2021 fiscal year, the Chinese market became L'OCCITANE's largest market globally for the first time, contributing 17% of sales. In the 2022 fiscal year, the Chinese market sales accounted for 18.1%, still ranking first.

However, in recent years, L'OCCITANE has gradually declined. Starting from the 2023 fiscal year, the Chinese market dropped to become the second largest market for L'OCCITANE Group, with the sales proportion decreasing from 18.4% to 14%, and further dropping to 12.9%. In contrast, the United States has become the largest market for L'OCCITANE sales, accounting for 27.2% of the group's total sales, compared to only 14.1% the previous year.

As early as July last year, rumors of L'OCCITANE's privatization circulated in the market, followed by a notification from its controlling shareholder, L'Occitane Group S.A., not ruling out the possibility of a comprehensive acquisition at a potential price of HKD 26 per share. However, this transaction was soon terminated. In February this year, it was reported that Blackstone Group was considering acquiring L'OCCITANE. Two months later, L'OCCITANE briefly halted trading to await the release of an announcement regarding "insider information on the acquisition and merger costs in accordance with the company's acquisition and merger rules," until April 29th, when the company officially confirmed the privatization plan.

On July 23rd this year, L'OCCITANE announced that 371 million shares of the tender offer shares were validly accepted, with the majority of shareholders having no objections to the privatization. Ultimately, L'OCCITANE agreed to privatize, and all remaining shares will be forcibly acquired and transferred to the offeror on October 15, 2024. From the perspective of the acquisition price, this is a premium acquisition. Compared to the potential price of HKD 26 per share last year, the final acquisition price of HKD 34 per share appears to be "sincere."

Prior to privatization, the financially turbulent L'OCCITANE underwent a "slimming down" process. In April, L'OCCITANE sold off the sub-brand Grown Alchemist, a skincare brand acquired just two years ago, which had been in the Chinese market for less than a year with dismal sales. In the same month, L'OCCITANE officially changed its CEO, with the new CEO Laurent Marteau taking office.

Before delisting, L'OCCITANE released its final financial report for the 2024 fiscal year (April 1, 2023, to March 31, 2024), showing an increase in net sales, but "increased revenue did not lead to increased profits." During the reporting period, L'OCCITANE Group achieved a revenue of 2.542 billion euros (approximately 20 billion RMB), with operating profit decreasing by 2.5% compared to the 2023 fiscal year, amounting to 233 million euros (approximately 1.8 billion RMB). Perhaps it is the declining performance of L'OCCITANE that has provided an opportunity for this privatization