TheChek News Flow

Several assets were left on the market in 2024.

Last year was a particularly slow one when it came to beauty M&A and at least the first half of 2025 is likely to follow suit.

Though some sources painted a rosier picture for 2025 than others, it seems that leadership changes and broader headwinds for larger conglomerates will keep buyers at bay for the beginning of the year — especially with a handful of brands left on the table from 2024.

“It doesn’t feel like anything’s going to be different in the next six months,” said an industry source, who added that while a few brands may join the mix this year, too many are still on the market from 2024. “They’re waiting to figure out what’s going on with the brands that are in market this year.

“People were saying deals would get done, but nothing got done,” the source continued. “Strategics are concerned about assets that grow super fast at rates over 30 percent. They have to value something and want brands that will be around for 10 to 20 years, and there’s no way to forecast for that.”

In U.S.-based makeup alone, Rare Beauty, Kosas Cosmetics, Glossier, Merit, Jane Iredale and Makeup by Mario were exploring options.

“Strategics are going through a recalibration period in terms of how they look at M&A,” said Ilya Seglin, managing director of Cascadia Capital. “Sponsors are pulling because they don’t know where strategics are going to focus, so they don’t know how to underwrite their exits. Once strategics come back, you’re going to see sponsors come back.”

Sectoral struggles faced by prime buyers, such as challenges in China, Asia travel retail and early signs of a potential softening in the U.S. beauty market, could also hamper activity.

“A lot of the assets in market already have institutional capital invested and want a strategic exit,” the source said. “If you look internally what’s happening at those buyers, they have a fiduciary duty to look at every asset but between issues in China and with travel retail, there’s too much going on internally for them to do any significant M&A.”

Conversely, Seglin posited that leadership changes could indicate the market heating up. Shiseido and the Estée Lauder Cos. began the new year with new chief executive officers, while the likes of Revlon and Unilever’s Prestige division also recently appointed new leaders.

“Those executives are highly incentivized to deliver growth, and they’re going to realize sooner rather than later that a lot of the core brands are not the growth engines they thought they were. So, you have to get growth, and do acquisitions. These people are sophisticated enough to walk and chew gum at the same time,” he said.

“They’re not growing at the rate they need to grow,” said another source of the beauty conglomerates. “They’re not going to do it with their own brands, they need to start acquiring. The way to cover up some of the internal issues is through acquisitions.”

Seglin thinks the sweet spot is between $50 million and $150 million in terms of revenue. “When you get to $200 million, at a healthy multiple, that’s a big check to write,” he said. “Nobody wants to buy a $200 million business and get it to $300 [million]. If you have great [stock keeping units], tight distribution, you can see how to get from $100 million to $500 million. A strategic can take brands global, and they have the infrastructure to do it.”

Outside of the U.S., Unilever is said to be considering the sale of two of its luxury skin care brands — Ren Skincare and Kate Somerville — as part of the consumer giant’s wider efforts to streamline operations, boost profits and deliver more value to shareholders. The group acquired both labels in 2015.

A mixed outlook hasn’t stopped a handful of companies from exploring sales, however.

Industry insiders say British beauty retailer Space NK — aside from its U.S. wholesale division — is up for sale. In June, PCA Companies acquired the U.S. branch of Space NK, which involves about 600 sales points across Bloomingdale’s, Nordstrom, Nordstrom Rack, Hudson’s Bay and the company’s shop-in-shop collaboration with Walmart and Beauty Space NK.

Space NK was founded in London’s Covent Garden by Nicky Kinnaird in 1993 as a high-end destination for niche international brands, many of them skin care, that were difficult to find in the U.K. Sales at Space NK, which is owned by Manzanita Capital, have been increasing by 30 percent annually over the past three years and growing two-and-a-half times faster than the U.K. prestige premium market.

Skin care brand Medik8 is also said to have hired J. P. Morgan to explore deal options. Founded in 2009 by Elliot Isaacs, the skin care brand’s revenues are set to exceed $100 million in 2025. Neither Medik8 nor J. P. Morgan responded to requests for comment by press time.

Swedish influencer makeup brand Caia Cosmetics, launched by Bianco Ingrosso, is said to be on the market, too. She cofounded Caia Cosmetics with business partner Vanessa Linblad and seasoned beauty entrepreneurs Mikael Snabb and Jesper Matsch in 2018. Caia Cosmetics expanded from makeup into hair care, skin care and fragrance. Its sales in 2024 were expected to reach 60 million euros, according to industry sources.

Kayali is another beauty brand being shopped around, sources said. The perfume brand, which means “my imagination” in Arabic, was introduced in late 2018 by beauty mogul Huda Kattan and her sisters Mona and Alya Kattan. They began with four scents meant to be layered, launching them in Huda Beauty’s core retailers, including Sephora, Cult Beauty, Harrods and Selfridges. Today, the brand has more than a dozen product references.

Couvent des Minimes is said to be on the block as well. The natural beauty brand, which was sold to HLD Group and Didier Tabary in 2017, was created in 2004. Named after a convent built in 1613 in the village of Mane, in the south of France, the label specializes in natural cosmetics and fragrances based on medicinal herbs. Couvent des Minimes is mostly sold through selective distribution, such as perfumeries and pharmacies.

Marissa Lepor, partner and head of beauty & personal care at The Sage Group, said: “I think 2024, aside from macro-economic headwinds and it being an election year, which generally makes investors a little more hesitant to close deals, the beauty strategics had significant shifts in their leadership teams, and typically when that happens, they’re not inclined to make large acquisitions. I think there’ll be more activity next year.

“The bar for all categories is high,” she continued. “There have been a lot of amazing companies acquired over the past few years, and what the strategics are looking for is not just great brands, but really brands that add incremental value to their existing portfolio companies, and really that incremental value can be attracting a younger customer. It can be bringing in expertise on a new way of marketing, or reaching new customers. It can be formula and kind of tech-driven, or it can just be like an insanely successful business, but one that really has the potential to be what they’re calling a lifetime brand. And so the bar isn’t just, is it a great business that’s growing and profitable, but really, is this something that’s bringing something new to their portfolio that they don’t already have?”

Newly released data from messaging app Telegram reveals a sharp rise in the number of data demands it fulfilled over the past year for users’ data from requesting law enforcement agencies.

The rise in fulfilled user requests comes months after French authorities arrested Telegram CEO Pavel Durov in August in part for the company’s longstanding refusal to provide user data in response to a child exploitation investigation. Soon after Durov’s arrest, Telegram appeared to relax its policy on how it handles abuse reports.

Telegram’s latest transparency data — requestable only with a Telegram account and limited to the region where the requesting user is located — shows the messaging app handed over phone numbers and IP addresses to U.S. authorities on 900 occasions during 2024, affecting 2,253 Telegram users.

That’s a spike in the number of fulfilled data requests compared to most of 2024, which saw Telegram respond to 14 requests for user data on a total of 108 users, according to a global crowdsourced map of requests produced by Meduza.

Telegram’s transparency figures for 2024 also show that the messaging app gave over phone numbers and IP addresses to Indian authorities on 14,641 occasions, affecting 23,535 users. For the United Kingdom, Telegram said it gave phone numbers and IP addresses to U.K. authorities a total of 142 times, affecting 293 users, up from single-digits under the previous reporting period.

Research adds to evidence that viral infections contribute to development of dementia

Repeated head injuries suffered by sports players and military personnel — a known risk factor for Alzheimer’s disease — may induce dementia by reactivating the dormant herpes virus in neural tissues, according to laboratory experiments.

The research at Tufts and Oxford universities, using stem cells turned to organoids or “brains in a dish”, offers more evidence that viruses, particularly those in the herpes family that are present in the majority of adults, play an important role in the development of Alzheimer’s.

The study, published on Tuesday in the journal Science Signalling, could speed up research into antiviral drugs that slow the onset of degenerative diseases.

Different experiments with brain organoids, published last week in Cell Reports by scientists at universities in the US and Israel, found that herpes infection accelerated the formation of tau, a toxic protein associated with Alzheimer’s and other neurodegenerative conditions.

Ruth Itzhaki, professorial fellow at Oxford’s Institute of Population Ageing, who worked with colleagues at Tufts, said recent studies left no doubt that viruses were involved in many cases of dementia. They are believed to harm the brain by inducing an inflammatory immune response rather than directly killing neurons.

“When I published the first evidence about viruses being active in the brain back in 1991, there was a shock-horror reaction from people in the field,” she said. “Since then evidence has appeared in more than 600 published papers but there is still quite a lot of opposition to the idea.”

According to the World Health Organization, more than 55mn people have dementia, with nearly 10mn new cases diagnosed every year. Alzheimer’s disease is the condition’s most common form, accounting for 60-70 per cent of cases.

Herpes simplex virus type-1 (HSV-1) is present in as many as 80 per cent of adults, either as an active infection or dormant, while 95 per cent harbour the relative varicella zoster virus, which causes shingles.

The Tufts and Oxford project used 6mm-wide models of the brain created from neural stem cells suffused through a spongy support, which grew into a communicating network of mature neurons.

The scientists gave the mini-brains either a single hard blow with a piston to mimic a traumatic head injury or a series of smaller jolts to mimic the effects of periodic milder concussion.

After repeated blows activated the dormant HSV-1 within the organoids, a build-up of amyloid plaque and tangles of tau protein — key markers of Alzheimer’s disease — was detected. This was not observed in uninfected organoids.

“This opens the question as to whether antiviral drugs or anti-inflammatory agents might be useful as early preventive treatments after head trauma to stop HSV-1 activation in its tracks, and lower the risk of Alzheimer’s disease,” said Dana Cairns, who led the research at Tufts.

The second study examined the molecular interactions between HSV-1 and tau proteins in brain organoids designed to model the progression of Alzheimer’s.

“Early on, changes in tau may protect brain cells by limiting the virus but, as the disease advances, these same changes could lead to more harm and accelerate neurodegeneration,” said Or Shemesh, project leader at the University of Pittsburgh and the Hebrew University of Jerusalem.

Julia Dudley, head of research strategy at the charity Alzheimer’s Research UK, said the two latest studies “offer new insights into how a common herpes virus could contribute to the early stages of Alzheimer’s disease . . . by affecting the brain’s immune system”.

She said the studies “highlight new treatment avenues, such as using medicines that target these viruses or reduce harmful inflammation in the brain”. Alzheimer’s Research UK was not involved in the studies.

According to research published last July, people vaccinated with Shingrix, which stops herpes zoster virus causing shingles, were significantly less likely to develop diseases such as Alzheimer’s.

Company dispatched 21 Rafale fighter jets in 2024, above guidance of 20

Dassault Aviation AM 1.08%increase; green up pointing triangle delivered more Rafale fighter jets to customers last year than in 2023 as geopolitical tensions remain elevated, though deliveries of its Falcon business jets came short of company guidance amid supply-chain hurdles.

The French aircraft manufacturer said it dispatched 21 Rafale fighter jets in 2024 compared with 13 a year earlier, above guidance of 20 aircraft. Deliveries of Dassault’s Falcon business jets climbed to 31 last year from 26 the year prior, but missed guidance of 35 deliveries.

The group didn’t elaborate on Falcon deliveries, but said last year that strained supply chains were weighing on production and, consequently, deliveries. Much of the aviation industry has been agonizing for years over supply-chain bottlenecks.

Dassault Aviation in July warned of shortages in its production lines, citing supplier inefficiencies in the aerostructure sector. The group said at the time that it was taking steps to anticipate those inefficiencies and mitigate their impact on production and deliveries.

The company logged 30 Export Rafale orders in 2024 against 60 in 2023. Meanwhile, the group reported 26 Falcon jet orders last year, above the 23 it received a year earlier.

Dassault Aviation’s backlog included 220 Rafale and 79 Falcon jets at the end of the year.

The group will post its 2024 financial results on March 5.

Amazon-backed OpenAI rival was valued at $18 billion last year

Anthropic is in advanced talks to raise $2 billion in a deal that would value it at $60 billion, making it the latest artificial-intelligence startup to seize upon investor euphoria for the technology.

The funding round is being led by the venture firm Lightspeed Venture Partners, people familiar with the matter said. The $60 billion valuation includes the money Anthropic plans to raise in the round.

The deal would make Anthropic the fifth-most valuable U.S. startup after SpaceX, OpenAI, Stripe and Databricks, according to data provider CB Insights. It was valued last year at $18 billion in a round led by Menlo Ventures.

There has been a dealmaking frenzy among AI companies since OpenAI raised $6.6 billion in an October round that nearly doubled its value to $157 billion.

Two other startups, Elon Musk’s xAI and Perplexity, subsequently raised money at substantially increased valuations.

Investors are excited about the potential of generative AI to transform how people work and live and largely unconcerned that most AI startups are losing money because of the high costs of the technology and intense competition.

Tech giants including Meta Platforms and Alphabet’s Google are also investing billions to build their own AI capabilities.

Anthropic was founded in 2021 by former OpenAI employees. Its main product is a chatbot called Claude that is popular among programmers and businesses, but trails ChatGPT among everyday users of the technology.

The company has distinguished itself for taking a public stance in favor of robust safety testing for its technology out of concern AI could be misused or unintentionally cause catastrophic harm to humanity.

Much of Anthropic’s funding to date has come from its close partner Amazon AMZN -2.02%decrease; red down pointing triangle, which committed $4 billion to the startup in November, bringing its total investment since 2023 to $8 billion. Amazon’s November investment was a convertible note, meaning it will translate to equity at the valuation set in the current round.

Anthropic develops and operates its technology in data centers operated by Amazon and Google, which has also invested billions of dollars in the startup.

The startup’s annualized revenue—an extrapolation of the next 12 months’ revenue based on recent sales—recently hit about $875 million, one of the knowledgeable people said. Most of that has come from sales to businesses.

OpenAI told investors when closing its October round that it expected to generate $3.7 billion in revenue last year, in large part from sales of the premium version of ChatGPT to consumers.

Class B bondholders have filed their own restructuring plan for the troubled utility

Thames Water’s junior bondholders have accused the troubled utility’s senior creditors of attaching “predatory” conditions to a £3bn emergency loan, which they claim is an attempt to “sidestep” regulatory oversight.

The claims by a group of Thames Water’s so-called class B bondholders came on Tuesday as it formally filed paperwork to seek court approval for its own rival loan proposal.

Thames Water, which is the UK’s largest water utility serving customers in and around London, is trying to win court approval for the controversial £3bn loan agreed with its top-ranking creditors. Thames Water faces the prospect of running out of cash in March if it cannot raise new financing, which would likely lead to the utility being temporarily renationalised under the government’s special administration regime.

“The company’s proposed plan looks to sidestep Ofwat’s approval, undermining proper regulatory procedures critical for a national utility with 16mn customers,” said the junior bondholders in a summary of their grounds of objection to the proposed loan filed with the court.

Thames Water’s rival classes of bondholders took aim at one another in a London high court hearing last month, during which the class B bondholders indicated that they would challenge proceedings and launch their own parallel restructuring plan for the company.

The class B bondholders announced on Tuesday that they had also formally filed “grounds of objection” to Thames Water’s proposal earlier this month.

Beyond the “excessive” costs of the class A loan, the lower ranking bondholders said they had also objected to “predatory conditions” on the debt that could hamper the company’s ability to raise equity; and the fact that Thames Water’s proposal was based on “flawed evidence”, as it did not incorporate the impact of a five-year price review agreed with water regulator Ofwat last month over how much utilities could raise customer bills by.

“We strongly oppose the attempts by Thames Water’s management to rely on outdated evidence to push through the courts an overly costly new loan that would unfairly grant creditors control over a critical utility and circumvent regulatory oversight, in particular without having run any competitive process to obtain better terms which are clearly available to it,” said a spokesperson for the class B creditors.

Thames Water and Ofwat did not immediately respond to requests for comment.

The class A bondholder group declined to comment. A barrister representing the class A creditors said in court last month that the class B lenders’ arguments that their loan would have a chilling effect on Thames Water’s ability to raise equity seemed “implausible”.