BEAUTY CARE

P&G settles lawsuit with Apollo Health

BY Antoinette Alexander

CINCINNATI Procter & Gamble announced last week that it has settled a lawsuit against Apollo Health and Beauty Care Corp. of Concord, Ontario, regarding the alleged infringement of its Herbal Essences intellectual property, including trademark, trade dress and industrial design rights.

The suit, filed in December 2008, involved the company’s Herbal Essences brand trade dress, the trademark and the unique design of the Herbal Essences bottles for shampoos and conditioners. In accordance with the settlement, Apollo Health and Beauty Care Corp. has agreed to stop distributing the bottles in issue. Other terms of the settlement will remain confidential, according to P&G.

P&G introduced the Herbal Essences packaging with the relaunch of the brand in 2006.

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Shiseido seeks to expand business through Bare Escentuals acquisition

BY Antoinette Alexander

TOKYO and SAN FRANCISCO Japan-based cosmetics company Shiseido is looking to acquire Bare Escentuals, a maker of mineral-based makeup, for about $1.7 billion in an all-cash deal.

The transaction was approved by the boards of directors of both companies and is expected to close in the first quarter 2010.

Shiseido, through a U.S. subsidiary, plans to purchase all outstanding shares of Bare Escentuals common stock for $18.20 per share. This represents a 40.8% premium to Bare Escentuals’ average closing stock price over the last three-month period ended Jan. 13, and a 39.9% premium over the closing price of Bare Escentuals’ common stock on Jan. 13.

Bare Escentuals’ business will operate as a separate division of Shiseido and its brands will continue to be managed by the current leadership team.

In connection with and as a condition to the tender offer, Leslie Blodgett, CEO of Bare Escentuals, has entered an amended license agreement with Bare Escentuals. She also has entered, along with CFO and COO of Bare Escentuals, Myles McCormick, a new employment agreement with Bare Escentuals that will take effect upon the closing of the tender offer.

“This looks to be a good operational fit for both companies. Bare’s growth over the new few years was largely expected to come outside the United States, particularly in Japan,” stated SunTrust Robinson Humphrey analyst William Chappell in a research note. “The merger with Shiseido should help accelerate this growth, while also giving that company a stronger foothold in the United States.”

Currently, more than 85% of Bare Escentuals’ revenue is generated in the United States through retail and direct sales.

Shiseido is Japan’s largest cosmetics company, with operations in more than 70 countries worldwide. It already is among the top three cosmetics brands in China and other Asian markets and has been increasing its global diversification. Shiseido has gained prominence in the U.S. retail market since the 1960s and operates several R&D facilities in the United States.

The companies stated that the deal will strengthen both companies and provide a platform for further growth by:

  • Expanding Shiseido’s brand portfolio into the mineral-based cosmetics market, attracting a wider customer base;
  • Creating a complementary multi-channel and truly global distribution network, giving Bare Escentuals greater access to Japan, as well as other fast-growing in such Asian markets as China;
  • Strengthening Shiseido’s U.S. and European business;
  • Maximizing both companies’ production capabilities and R&D resources;
  • Delivering a significant premium to Bare Escentuals shareholders; and
  • Offering compelling growth prospects and future value creation for Shiseido shareholders.

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P&G develops eStore concept with PFSweb

BY Antoinette Alexander

CINCINNATI Procter & Gamble is testing Web sales via an online “learning lab” developed in partnership with e-commerce services provider PFSweb.

The online store, called the eStore, will be owned and operated by PFSweb and will exclusively feature P&G products to consumers in the United States. The eStore is expected to launch in the spring, following a pilot of the site with 5,000 consumers that will begin in the coming weeks.

P&G initiated the eStore concept and has been working its ideas for test concepts and programs with PFSweb. Product pricing, promotion, shelving and distribution will be at the sole discretion of PFSweb. P&G will work closely with PFSweb to identify new concepts, programs and marketing efforts to test via the eStore.

“We are very excited about the eStore’s potential to reach more consumers and create new online experiences and innovations that build our brands online,” stated Kirk Perry, P&G’s VP, North America. “Ultimately, our goal in working with an experienced e-commerce business like PFSweb is to test concepts and programs that can be reapplied with all of our online retail partners in ways that exponentially grow consumer affinity for our brands and mutually increase sales for P&G and our retailer partners.”

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