Henkel to Acquire Zotos From Shiseido for $485M

Henkel acquires Zotos for $485M
By Allison Collins. Source: WWD.

Shiseido Co. Ltd. is selling Zotos International Ltd. to Henkel for $485 million as it works to hone its business on key beauty categories.

Darien, Conn.-based Zotos manufactures and sells a full range of hair care, texture services and coloring options for salons. The business is mostly focused on North America, but also sells in Europe and Asia. Zotos brands include Joico, Agebeautiful, Biotera, Bain de Terre, Vero K-Pak Color, Lumishine, iColor, ISO Options, Quantum, Vita-E and Senscience. The business has about 700 employees, and operates a manufacturing site as well as research and development facility.

Zotos posted $233 million in net sales for fiscal 2016. The deal is expected to close in December. Under Henkel, Zotos anticipates strengthening its business in key geographic markets.

Henkel says the deal allows it to strengthen its professional business in the U.S.

“This acquisition is part of our strategy to expand our position in attractive markets and categories,” Hans Van Bylen, Henkel chief executive officer, said. “It will further strengthen our Hair Professional business in the U.S., the world’s single-biggest hair professional market. The high-performance and high-quality brands are a perfect fit for our beauty-care business.

“At Henkel, we have strong capabilities to identify compelling acquisition targets with a clear strategic fit and attractive valuations,” said Carsten Knobel, chief financial officer of Henkel. She has acquired other professional hair businesses in the past, including Sexy Hair, Alterna and Kenra, as well as Nattura Laboratorios, which owns Pravana.

Shiseido has been an outstanding home for Zotos for almost three decades — as part of Shiseido’s Professional Division, Zotos added even more layers of innovation and artistry to its products and achieved significant milestones, including becoming one of the fastest-growing midsize companies in professional beauty,” said Nancy Bernardini, president of Zotos. “By joining Henkel, we will be taking important steps for the future of our business, focusing on strategic geographic markets that are key to our long-term success while continually invigorating our brands as part of Henkel’s highly complementary portfolio.”

For Shiseido, the move underscores its intention to focus on its professional division in Asia — not North America. It has owned Zotos, which was founded in 1932, since 1988.

“The professional business has been a cornerstone of Shiseido’s heritage since the company opened its first beauty salon in Japan nearly a century ago, and we remain as committed and focused as ever on cultivating and strengthening this key business in the fast-growing Asian markets, including China and Asia-Pacific as well as Japan,” said Masahiko Uotani, president and group chief executive officer of Shiseido. “Henkel’s offer to acquire Zotos provides a great opportunity for our Professional group to concentrate its focus on its core capabilities in Asia.”

As part of its overarching Vision 2020 strategy, Shiseido is working to optimize its portfolio and growing its prestige beauty business globally, as well as its mass, personal care and professional businesses in Asia. Shiseido plans to use funds from the transaction to grow its prestige brands and “reinforce production capability,” the company said.

Henkel is not the only business ramping up its professional hair operations. Coty Inc. picked up a handful of professional lines, including Wella, when it bought Procter & Gamble’s specialty beauty portfolio in 2016 (it subsequently acquired GHD, which makes hair tools). L’Oréal USA’s SalonCentric has also made acquisitions in the space — in May, it picked up assets from Four Star Salon Services that will help it expand salon distribution in New York, New Jersey and Connecticut.

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