Multinational fashion retailer Estée Lauder has closed the first phase of increasing its investment in Canadian vertically integrated multi-brand company DECIEM.
In February, Estée Lauder announced an agreement to increase its ownership in DECIEM, known as the ‘Abnormal Beauty Company’ from 29% to 76%.
After completing the first phase, the retailer now owns around 76% of DECIEM.
Under the terms of the agreement, Estée Lauder can further increase its ownership in the company by acquiring the remaining interests after three years. The purchase price will be based on DECIEM’s future performance.
The first transaction is due to be completed in the quarter ending 30 June.
Estée Lauder will pay around $1bn at the transaction’s closing, reflecting a total enterprise value of around $2.2bn.
DECIEM was founded in 2013 by the late Brandon Truaxe alongside Pasquale Cusano and Nicola Kilner, the latter of whom is still serving as its CEO.
The company’s current portfolio comprises six brands, including popular skincare brand The Ordinary.
Despite the impacts of the Covid-19 pandemic, DECIEM has sold more than one product every second, opened its 35th store and added 1,000 employees over the past year.
The company is currently developing a 70,000ft² HQ and is planning to expand its retail footprint this year.
Earlier this month, Estée Lauder reported a 16% increase in total net sales to $3.86bn for the quarter ending 31 March, compared to $3.35bn in the same period a year earlier.
The company’s net earnings for the quarter were $456m, compared with a net loss of $6m in the prior-year period.
Its diluted net earnings per common share (EPS) was $1.24, compared with a loss of $0.02 a year earlier, while its adjusted diluted EPS increased by 88%.