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Family controlled Estee Lauder Companies buy BECCA Cosmetics

By James Beech

The family controlled group known as the Estée Lauder Companies has bought BECCA Cosmetics for a speculated $200 million, rescuing its share price.

BECCA's sales were mainly in North American department stores and online but the 15-year-old company was making efforts before the acquisition by the beauty empire to expand in South-East Asia, Europe and the Middle East via French cosmetics chain store Sephora. The BECCA brand has a notable social media presence, including more than 1.2 million Instagram followers.

BECCA said the “extra support” from Estée Lauder meant worldwide expansion of its products, which will remain the same. It pledged to remain a cruelty-free company.

While the purchase prices was undisclosed, insiders have pegged the sum at about $200 million.

The share price of Estée Lauder Companies on the New York Stock Exchange had declined steadily from a high of 95.10 on 18 August. However, the BECCA announcement on 21 October saw the price begin to rally from its lowest point of 85.97 to 86.63 by 4pm on 24 October, Eastern Standard Time.

“The BECCA philosophy of inclusive beauty is a terrific match for the Estée Lauder Companies,” William Lauder, executive chairman, said.

“One of our leading strengths is the ability to identify brands with unique positioning and nurture them to realise their full growth potential. We are so pleased to partner with Bob and Jim (president and chief executive Robert DeBaker and chief financial officer/chief operating officer James MacPherson) to continue this legacy, and we welcome them and their team to our family.”

William Lauder is the son of Leonard and Evelyn Lauder and the grandson of Estée and Joseph Lauder, who founded their company 70 years ago in 1946. Estée (pictured in 1988) died in her Manhattan home on 24 April 2004, aged 97.

Her grandson William Lauder became executive chairman and chairman of the board of directors in 2009. He is credited with expanding the company's international presence and distribution channels, and strengthening the brand portfolio during his previous five-year tenure as chief executive

William Lauder is on the faculty of the Wharton School of the University of Pennsylvania, where he teaches “Decision Making in the Leadership Chair,” a course he designed for second-year MBA students.

BECCA Cosmetics joins the portfolio of skin care, makeup, fragrance and hair care brands made and sold by The Estée Lauder Companies via its 46,000 employees in more than 150 countries and territories.

BECCA's new stable mates include Estée Lauder, Aramis, Clinique, Prescriptives, Lab Series, Origins, Tommy Hilfiger, M·A·C, Kiton, La Mer, Bobbi Brown, Donna Karan New York, DKNY, Aveda, Jo Malone London, Bumble and bumble, Michael Kors, Darphin, Tom Ford, Smashbox, Ermenegildo Zegna, AERIN, Tory Burch, RODIN olio lusso, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW and By Kilian.

The group in fiscal 2016 delivered net sales of $11.26 billion, adjusted net earnings of $1.21 billion and adjusted diluted earnings per share of $3.20. Cash flow from operations was $1.79 billion. During the 2016 fiscal year, the group increased its dividend rate by 25%, repurchased $890 million of outstanding shares and returned more than 100% of free cash flow to stockholders.

“Over the next three years, we expect to generate sales growth of 6% to 8% and double-digit EPS increases, excluding restructuring and other charges, in constant currency,” its latest financial report said.

“For fiscal 2017, we expect to once again outpace global prestige beauty growth and gain share, despite external headwinds and challenges."