S'Young Group Acquiring RéVive Skincare
In this article, we will discuss S’Young Group’s acquisition of RéVive Skincare.
S’Young Group is a publicly listed Chinese company specializing in the sales and manufacturing of beauty products. In addition to cultivating its own beauty brands, S’Young actively acquires global beauty companies to strengthen its brand portfolio.
With robust online and offline retail connections in China, S’Young also provides solutions to help global beauty brands expand in the Chinese market.
RéVive Skincare is a luxury skincare brand from the U.S., developed by Dr. Brown, a plastic and reconstructive surgeon.
So, why is S’Young Group acquiring RéVive?
S’Young’s management noted that they evaluate around 100 potential deals each year. What sets RéVive apart that led S’Young to choose this acquisition?
To better understand S’Young’s motivation, we will apply our STAR deal evaluation framework: Strategic Fit, Transaction Structure, Actionability, and Return.
Strategic Fit
Since 2021, S’Young has been transforming its brand positioning from mass-market to luxury products.
RéVive’s product price points range from approximately USD 300 and up to USD 2,000, aligning with S’Young’s desired luxury brand positioning.
This shift has been notably successful, particularly after acquiring the Franco-Japanese luxury skincare brand EviDenS de Beaute (EDB). S’Young aims to replicate this operational success with RéVive.
S’Young plans to boost RéVive's sales in China by leveraging its extensive online and offline networks.
Currently, about 80% of RéVive’s sales come from Europe and the Americas, indicating significant growth potential in the Chinese market, which accounts for only around 10% of its sales.
Additionally, S’Young sees strong synergy between RéVive and EDB's global sales channels.
RéVive has a robust U.S. offline presence, including retailers like Neiman Marcus, Saks Fifth Avenue, and Bergdorf Goodman, as well as over 100 department stores.
These channels are complementary to S’Young and EDB’s existing U.S. sales network and will be valuable assets for any additional brands S’Young may choose to curate.
Unlike mass-market cosmetics, which are increasingly sold online, 50-70% of luxury brand sales still occur in physical stores, emphasizing the importance of in-store experiences and services.
Therefore, there is a strong synergy potential from channel sharing from this deal.
Transaction Structure
While strategic players typically seek to acquire 100% control, S’Young has indicated that the founder and existing management team of RéVive will retain a minority stake, allowing for more independent operations.
This structure financially incentivizes the founder and management team to support the company’s next phase of growth.
In addition to driving sales growth, S’Young likely values RéVive for its R&D capabilities, given the founder’s expertise and the brand’s established market presence.
With 30 years of history, RéVive’s unique brand positioning has been tested, making it essential for S’Young to retain the original management team to guide future growth.
Actionability
S’Young will acquire RéVive from Tengram Capital Partners, which purchased the brand in 2017. This deal is actionable, as it has been seven years since Tengram’s investment, and S’Young’s offer provides an exit opportunity for the private equity firm.
According to S’Young’s management, the transaction is expected to close soon by the end of October 2024.
This timeline suggests confidence in navigating through preparation without significant hurdles such as regulatory processes.
In the current geopolitical climate, it is often perceived as challenging for Chinese companies to acquire U.S. businesses. However, given that the target in this case is a consumer product company that does not involve sensitive information, regulatory concerns may be less pronounced.
Return
In terms of financial returns and KPIs, the acquisition presents several compelling benefits for S’Young.
Although specific quantitative KPIs or financial goals have not been disclosed, the company’s latest financial performance for the first half of 2024 shows nearly flat year-on-year sales, while gross profit has increased by over 8%. Management attributes this margin improvement to a higher proportion of luxury brand products in the sales mix.
By acquiring RéVive, S’Young not only gains immediate sales but also stands to generate revenue synergies by sharing channel networks. Successfully selling more luxury brand products could also continue to improve margins of the overall company.
Final Remark
Alright, we have now analyzed the deal using our STAR evaluation framework and hope you have a clearer understanding of S’Young's motivations for acquiring RéVive.
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