The K-beauty mergers and acquisitions (M&A) market is experiencing a resurgence, driven by increased investor interest from the United States and Japan. As of August 2024, 12 M&A deals have been completed, making it the most active period since 2018, when L’Oréal’s acquisition of Stylenanda highlighted a peak in K-beauty transactions.
A joint analysis by ChosunBiz and MMP, a South Korean M&A advisory firm, reported that 12 K-beauty brand transactions were finalized between January and August 2024. Notable deals include GP Club’s acquisition of cosmetics distributor KODI and Morgan Stanley PE’s purchase of skincare brand Skin Idea.
The acquisition of Skin Idea marked Morgan Stanley PE’s first buyout since its 2021 purchase of health supplement manufacturer Life & Bio. Other significant transactions this year include Hahn & Company’s acquisition of skincare medical device firm Cynosure and Goodai Global’s purchase of TIRTIR, a brand managed by Beauty of Joseon.
If the current trend continues, 2024 could see the highest number of K-beauty M&A deals ever, nearing the record of 13 deals set in 2018. Recently, Craver Corporation, known for its SKIN1004 brand, selected Goodai Global as the preferred bidder for its majority stake, moving the deal closer to completion.
The resurgence comes after a period of decline in the South Korean cosmetics industry, which struggled following the THAAD dispute and increased competition from Chinese domestic brands. The number of K-beauty M&A deals dropped from 13 in 2018 to just four in 2020.
Analysts attribute this year’s growth in M&A activity to renewed interest in Korean skincare products, particularly in the U.S. and Japan, where the market expanded rapidly during the COVID-19 pandemic.
Many leading K-beauty brands involved in recent M&A deals are relatively young indie companies founded within the last decade. These brands, with annual revenues around 100 billion won and operating profits between 20 billion and 50 billion won, are seen as attractive acquisition targets due to their growth potential and product diversification opportunities.
“There’s fierce competition to acquire promising indie brands, with the belief that expanding into new markets is key to success,” said an industry insider. “Additionally, K-beauty startup founders are increasingly open to selling their businesses, inspired by recent successful exits.”
The M&A market is expected to grow further as conglomerates from unrelated industries begin to acquire cosmetic brands. Dae Myung Chemical, a major player in the South Korean fashion industry, recently acquired cosmetics distributor MOST through its subsidiary, Pond Group.
Shinsegae Group, traditionally focused on international cosmetic brands, has also entered the K-beauty market. Earlier this month, Shinsegae International acquired a 100% stake in AMUSE, a brand known for its popular “Jang Won-young tint,” for 71.3 billion won. The company is reportedly considering additional acquisitions in the skincare sector.
