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Yuemu considering options following failed deal: Bloomberg
Posted on Wednesday, 25 March 2020 08:49
Shanghai Yuemu Cosmetics, the maker of top-selling facial beauty mask products, is weighing up strategic alternatives that may include a potential sale after failing to merge with Zhonglu in 2018, Bloomberg reported.
Citing people familiar with the matter, the news provider observed that the Chinese business is working with an unnamed advisor on the exploration of options and is engaging talks with private equity firms and other cosmetics businesses.
Yuemu creates Mofashijia beauty products and may considering bringing in other external investors.
The success of a new deal, according to the sources, depends on if investors are willing to bet on China’s fast-growing consumer market, which is recovering from the aftermath of the coronavirus outbreak.
Shanghai-listed bicycle maker Zhonglu announced plans to acquire Yuemu for CNY 5.60 billion (USD 791.80 million) in a cash and stock deal in early 2018.
It later lowered the offer for the cosmetics business to CNY 4.00 billion as the group failed to deliver the financial performance agreed in the initial transaction.
The deliberations fell apart in 2019.
Talks are still in the early stages and may not lead to a transaction, the insiders said, who asked not to be identified as the situation is still private.
Representatives for the company did not respond to Bloomberg’s request for comment.
Yuemu was established in 2007 and posted net income of CNY 300.00 million in 2017, according to the original acquisition plan announced in 2018.
The beauty mask market in China has expanded rapidly between 2012 and 2017, growing at an average compounded annual rate of 15.8 per cent, according to data compiled by ASKCI Consulting.
By 2023, the sector will be worth CNY 45.00 billion.
According to Zephyr, the M&A database published by Bureau van Dijk, there have been 2,429 deals targeting Chinese companies announced worldwide in 2020 to date.
Aluminium products Liaoning Zhongwang Group is being acquired by CRED Holding in a deal worth CNY 30.50 billion in the largest of these.
© Zephus Ltd