CVC Capital in Talks to Buy Control of Cosmetics Retailer Douglas
A deal is expected to value Douglas at roughly $3 billion
Private equity firm CVC Capital Partners is in advanced talks to buy a majority stake in German perfume and cosmetics retailer Douglas from rival fund Advent International, in a transaction likely valuing the chain at roughly €2.8 billion ($3.1 billion), according to people familiar with the matter.
A deal could be announced as early as Monday, these people said.
News of the potential deal comes just days after Douglas announced plans to list a minority stake on the stock market this summer. An outright sale, if successful, would replace plans for an IPO.
Advent initially sought a valuation of between €3 billion and €3.5 billion for Douglas, according to executives and people familiar with the matter, well above the apparent current valuation.
Advent and the founding family of Douglas took the retailer private in 2012 for roughly €1.5 billion. They subsequently sold ancillary operations, including jewelry retailer Christ. Douglas last year bought French perfume retailer Nocibé, boosting the number of perfume and cosmetic outlets in its network to roughly 1,700.
CVC is no stranger to the sector. The buyout firm snapped up Denmark’s biggest health and beauty retailer, Matas A/S, for roughly $900 million in 2006. Matas went public again in 2013.
Financial investor KKR & Co. and French Luxury goods giant LVMH Moët Hennessy Louis Vuitton SA have also weighed buying Douglas, people familiar with the matter said earlier.
Douglas said last week that it expected earnings before interest, taxes, depreciation and amortization, or Ebitda, of €274 million for the fiscal year ending September 30.
Record low interest rates and low bond yields have pushed the German DAX30 benchmark index into record territory above 11,500 since March, facilitating initial public offerings. But at the same time, many private equity firms prefer a fast exit via direct sale because an IPO exposes them to volatile stock markets.
Advent has hired Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. to advise on the dual track process. Additionally, Deutsche Bank AG, Credit Suisse AG and Morgan Stanley have been mandated help on a potential IPO, these people say.