L'OCCITANE bids farewell to the Hong Kong stock market: The 14-year journey of listing comes to an end

As the privatization process continues, the 14-year journey of the well-known French personal care and home lifestyle brand L'Occitane in the Hong Kong stock market is coming to an end. On September 13, L'Occitane's stock officially ceased trading on the Hong Kong Stock Exchange, marking the countdown phase of this international brand's glorious chapter in the Hong Kong capital market. According to the plan, its listing status will be officially withdrawn on October 16, bringing a successful conclusion to this capital market journey that has lasted for more than a decade.

L'Occitane: A Skincare Legend from Provence to the World

Founded in Provence, France in 1976, L'Occitane quickly gained recognition in the international market with its unique natural essential oil products and rich product line. The company's products cover various series such as shea butter, lavender, verbena, rose, cherry blossom, etc., involving hand and lip care, body care, facial care, hair care, fragrance, and other fields. Its hand cream is known as the "Hermes of hand creams" and enjoys high popularity and reputation domestically.

In 1995, L'Occitane first entered the Hong Kong market, and then successfully expanded to mainland China in 2005, gradually establishing a solid foundation in the Chinese market. On May 7, 2010, L'Occitane went public on the Hong Kong Stock Exchange, becoming the first French company listed on the Hong Kong stock market. This milestone event not only showcased the brand's influence in the global market but also injected new vitality into its subsequent development.

Privatization Process: From Rumors to Reality

However, the good times did not last long. In July last year, there were sudden rumors in the market about L'Occitane's privatization. Although the company once issued announcements to clarify that it had not received any related plans or suggestions, the controlling shareholder had been reviewing various options regarding the company's equity, including privatization. This news attracted widespread attention and speculation in the market.

In August of the same year, L'Occitane once again announced that the controlling shareholder would make a conditional voluntary full takeover offer, with specific details still under consideration. However, just a month later, the controlling shareholder decided to terminate the transaction, causing the privatization process to temporarily stall.

In April this year, there were once again reports in the market that Reinold Geiger, the billionaire owner of L'Occitane Groupe S.A., would make a tender offer to acquire L'Occitane, a deal that could value the company at around $7 billion. Shortly after, L'Occitane officially announced that the controlling shareholder had proposed to acquire all the remaining shares of the company, planning to privatize the company and delist its shares from the Stock Exchange of Hong Kong. The cash offer price per share is HKD 34, setting a new historical high since the company's listing on the Hong Kong stock market.

On July 23, L'Occitane announced that 371 million shares of the tender offer had been validly accepted, with most shareholders having no objections to the privatization. The company agreed to privatize, and all remaining shares will be forcibly acquired and transferred to the offeror on October 15, 2024. This decision marks a substantial progress in L'Occitane's privatization process Market Performance and Strategic Adjustments

As the privatization process continues to advance, L'OCCITANE's performance in the market has also attracted attention. In recent years, the company has successively acquired multiple high-end skincare and beauty brands, such as the American makeup brand LimeLife, the British luxury skincare brand ELEMIS, and the North American high-end body care brand SDJ, to strengthen its presence in the high-end market, expand its brand portfolio, and increase the group's scale.

In terms of financial performance, L'OCCITANE has shown overall revenue growth since its listing. However, in recent years, the company has been experiencing increasing revenue without a corresponding increase in profitability. The financial report data for the 2024 fiscal year shows that the company's full-year sales revenue increased by 19.1% year-on-year to 2.542 billion euros; however, operating profit decreased by 2.5% from the 2023 fiscal year to 233 million euros, with an operating profit margin of 9.2%; net profit was 93.89 million euros, a decrease of 18.4% year-on-year. This performance has raised concerns in the market about the company's future development strategy.

Despite facing challenges, L'OCCITANE's performance in the Chinese market remains strong. Although in the 2024 fiscal year, the sales contribution from the Chinese market decreased to 12.9%, ranking as the second largest market globally, the company has affirmed the performance in the Chinese market. The Asia-Pacific region achieved a significant growth of 6.3% in the 2024 fiscal year at fixed exchange rates, with the Chinese market showing a robust growth of 19.3% at fixed exchange rates. This growth was mainly driven by the continuous development of the L'OCCITANE en Provence and ELEMIS brands.

For the Chinese market, L'OCCITANE has adopted an active marketing strategy. In the 2024 fiscal year, all channels in China achieved double-digit sales growth, attributed to additional marketing investments attracting new online store traffic and the launch of the Douyin online mall channel in China. Additionally, the company implemented a flexible product strategy for high-value body moisturizing products in China, increasing the average order value and effectively compensating for the decline in foot traffic in offline channels.

Future Outlook After Privatization

Although delisting from the Hong Kong Stock Exchange is a certainty, it does not mean that L'OCCITANE will abandon the Chinese market. During the mid-year conference call for the 2024 fiscal year, the then CEO of L'OCCITANE stated that the group will significantly increase marketing investments, continue to expand in the lower-tier Chinese markets, and plan to open 10 to 15 new stores in third and fourth-tier cities. This strategic adjustment demonstrates the company's strong confidence in the long-term development of the Chinese market.

Furthermore, L'OCCITANE has indicated that by transitioning to a private enterprise, the group will have greater autonomy in strategic investment decisions and will be able to more effectively implement strategies. This decision will help the company to be more agile in responding to market changes and seize new development opportunities