L’Occitane shares see upward movement

The company noted that if a deal were to materialise, the potential offer price would not be lower than HK$26 per share.

3 mins read

Skincare chain L’Occitane International’s shares have experienced a significant uptick following the revelation that its billionaire chairman is contemplating a move to take the company private. In response to the news, the company issued a confirmation on Friday that Reinold Geiger, its controlling shareholder, is exploring the possibility of acquiring the shares he does not currently possess. Geiger presently commands ownership of nearly 75% of the firm’s shares.

L’Occitane International, with over 3,000 stores spanning 90 countries and a workforce exceeding 8,500 employees, saw its shares conclude over 8% higher at HK$27.75 in Hong Kong on Monday.

Renowned for its distinctive yellow branding and luxury skincare products like creams, soaps, and oils, the L’Occitane en Provence line has made considerable strides since its humble beginnings in a small truck at the markets of Provence, France. The brand now includes products from Elemis and Korean skincare brand Erborian. The company reported profits of €239 million (£206 million) in its latest annual report for the year ending March 31.

Trading in L’Occitane International’s shares was briefly suspended on the Hong Kong Stock Exchange following reports from news media indicating advanced discussions between Geiger and the board regarding the potential privatisation. Bloomberg suggested a valuation of the firm around $6.5 billion (£5.1 billion), equivalent to approximately HK$35 ($4.47; £3.53) per share. However, L’Occitane responded in an exchange filing, discrediting the notion of such a high buyout price as “false and without basis.” The company noted that if a deal were to materialise, the potential offer price would not be lower than HK$26 per share.

L’Occitane Groupe, Mr. Geiger’s investment holding company, commands ownership of over 70% of the chain. Over the past month, the company’s shares have risen by over 40%. Its most recent annual report demonstrated net sales of €2.13 billion ($2.33 billion; £1.84 billion) worldwide in the preceding financial year, marking an almost 20% increase from the previous year.

Despite its emphasis on recycling and sustainability initiatives, L’Occitane received criticism in April of the previous year for reversing its decision to close Russian stores and websites. The company stated that the reversal was prompted by “enormous human suffering and escalating military action in Ukraine.” Prior to this reversal, L’Occitane had been keeping its shops open to safeguard its staff from potential “retaliation.” The decision faced criticism from some customers, with calls even arising for a boycott of the brand.