LVMH-backed firm buys into Italy's KIKO in $1.5 billion make-up deal

By Valentina Za

MILAN (Reuters) -LVMH-backed buyout firm L Catterton has agreed to buy a majority stake in KIKO Milano in a deal which a source close to the matter said valued the family-owned Italian low-cost make-up group at around 1.4 billion euros ($1.5 billion) including debt.

L Catterton, which specialises in consumer goods is buying the stake from Italy's Percassi family, which in 1997 founded what is now one of the world's biggest privately-owned make-up brands, the two companies said in a joint statement.

The Percassis will retain a "significant" stake in KIKO, they added, without giving further detail.

The global beauty products market is expected to grow to $128 billion by 2032 from $78 billion last year, Fortune Business Insight predicts.

L'Oreal, meanwhile, forecast the market will add around 600 million middle and upper-middle class consumers globally by 2030, with demand growing in countries such as China, Indonesia and Egypt, while staying solid among baby-boomers in mature markets such as Europe or North America.

L Catterton has already invested in more than 30 beauty brands, including Intercos, an Italian make-up manufacturer supplying top luxury brands, UK skincare maker Elemis, Japan's ETVOS, haircare brand Maria Nila and consumer-tech firm Oddity.

KIKO, whose revenues rose by 20% last year to around 800 million euros, runs more than 1,100 shops in 66 countries.

Its products, known for combining quality with an accessible price, are attractively displayed to lure in customers, especially younger ones.

"Innovative products' quality, accessibility, personalized consultancy, and captivating packaging design stand as the brand's distinctive elements," said KIKO CEO Simone Dominici.

KIKO also sells online and some of its products are best sellers across all age groups.

Dominici said KIKO would expand in the United States with the support of L Catterton and its senior adviser John Demsey - a former Estee Lauder executive who developed the MAC Cosmetics brand before resigning over an Instagram post scandal.

The Percassis, who hail from the northern Italian town of Bergamo and own the Serie A soccer team Atalanta, also founded barbershop products Bullfrog and men's cosmetics brand Womo.

Active in retail real estate, the Percassi group runs commercial operations in Italy for companies such as Starbucks, Nike, Gucci and Victoria's Secret. With offices across the world, the firm has 9,000 employees.

BNP Paribas, BofA Securities, Intesa Sanpaolo IMI CIB, law firm Gatti Pavesi Bianchi Ludovici and Deloitte advised the Percassi family. L Catterton worked with Bonelli Erede as legal counsel and PWC.

($1 = 0.9304 euros)

(Reporting by Valentina Za, editing by Gavin Jones and Alexander Smith)