L’Oreal to Buy 10% Stake in Swiss Injectables Maker Galderma

(Bloomberg) — L’Oreal SA is buying a 10% stake in Galderma Group AG, a Swiss maker of injectable skin fillers, with the two agreeing to collaborate on new products to reduce the signs of aging. 

The French beauty company is acquiring the holding from EQT-led Sunshine SwissCo AG, Abu Dhabi Investment Authority and Auba Investment Pte., L’Oreal said in a statement Monday.

The purchase price wasn’t disclosed, but based on Galderma’s market value the stake would be worth about 1.6 billion Swiss francs ($1.9 billion). The deal will be made at an “undisclosed premium,” Galderma said.

Shares of Galderma, whose brands include Cetaphil, bucked a broad market selloff to rise as much as 7.8%, the biggest advance since the company’s initial public offering in March. L’Oreal declined by as much as 1.9% in Paris.

The deal includes an agreement to form a scientific partnership to create new skincare products to drive growth in a world where people want to look younger for longer. L’Oreal’s dermatological beauty division is the company’s most profitable and fastest-growing unit, with like-for-like sales increasing by 16% in the first half.

Analysts welcomed the move, saying there could be synergies between the two groups. Oddo analysts also said the deal makes sense for L’Oreal, whose strategy is to enlarge its operational footprint in every part of the beauty space.

L’Oreal has returned about 72% to shareholders over the last five years, thanks to a boom in skincare and increased spending on beauty globally. More recently its growth outlook has cooled, and the stock is down about 7% over the last year in part because of a slowdown in China. 

Galderma, whose products include dermo-cosmetics, drugs and hyaluronic fillers, was founded in 1981 as a joint venture between L’Oreal and Nestle SA. The Swiss food group exchanged part of its holding in L’Oreal for the Paris-listed group’s stake in Galderma in 2014. 

It then agreed to sell that unit to the consortium led by Swedish buyout group EQT in 2019, to focus its business on nutrition and health following pressure by activist Dan Loeb’s Third Point. Galderma’s March IPO was Switzerland’s biggest in two decades.

The transaction will be funded with L’Oreal’s available cash and credit lines, and is expected to be completed in the coming days. L’Oreal said it won’t seek any board seats. 

–With assistance from Allegra Catelli.

(Updates with analyst comment)

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