L’Oreal Acquires Nice & Lovely

French multinational company and makers of Dark and Lovely hair care products; L’Oreal has bought Interconsumer Products, owners of Nice & Lovely.

“We closed the deal on Friday at 11am and all I can a say for now is that the transaction is worth billions of shillings,” said one of the transaction advisers who declined to be named since L’ Oreal had not cleared with regulators in France and London.

“All the details will be made public on Monday (today) and it’s a great Kenyan story for a man who started the business in Kariobangi and has now joined the billionaires’ club.”

As part of the deal, Kinuthia will take over the debts of the beauty division while L’Oreal will take over the health and beauty business.

L’Oreal bought the Kenyan firm with an eye on East Africa’s low-end cosmetic market. It has over the last decade target alternative beauty markets by acquiring local brands in new markets to gain distribution networks and brands.

L’Oreal first open shop in Kenya (Nairobi) in late 2011 and has in the past 18 months been in talks with the owner of Interconsumer Products, Paul Kinuthia, for a buyout deal.

South Africa’s Tiger Brand also expressed interest in buying Interconsumer Products to cut revenues generated from its home market to 30 per cent.

An acquisition provides an easy solution compared to starting from scratch, which could involve buying land, putting up buildings, hiring local staff, seeking regulatory approval, struggling to gain distribution networks and fighting for market share against established rivals.

L’Oreal is another French group has that pitched its tent in the East African nation in recent months. Total Kenya and caterer Servair are some of the French company that has invested in the East African economy in recent time.

In 2000, the French multinational purchased SoftSheen Carson, which developed products targeted at Africans. The company posted a Sh324.8 billion ($3.84 billion) profit boosted by earnings from emerging markets in 2012.

As at 2011, L’Oreal annual revenues stood at €22.5 billion (Sh2.5 trillion), a figure higher more than the Sh1.65 trillion combined market valuation of the 61 companies listed on the Nairobi Securities Exchange.