Bridgepoint exits UK luxury goods maker

Kao, Japan’s leading household products manufacturer, has agreed to buy luxury consumer products maker Molton Brown from UK-based buyout firm Bridgepoint for £170m.

Kao, which is being advised by Goldman Sachs and Lovells, said at the weekend that it was in negotiations to buy Molton Brown, which is being advised by Rothschild and Travers Smith.

Langholm Capital, the private equity firm backed by consumer services groups Unilever and Whitbread, was reportedly in initial discussions to buy Molton Brown earlier in the year.

Bridgepoint initially took a 15% stake in Molton Brown in 1994 and increased this to 60.5% in 2003 as part of a refinancing that valued the company at about £76m, including debt provided by HSBC. Bridgepoint’s equity investment has been about £28m. Management holds the remainder of Molton Brown’s shares.

Molton Brown’s turnover for its beauty products, cosmetics, leather goods and house wares was £45m for the year to March 31, Bridgepoint said.

Rob Moores, a partner at Bridgepoint, said Molton Brown had been a successful investment for the firm since it first acquired a stake more than 10 years ago.

“Over this period management has demonstrated great skill in developing a model that has allowed the business to expand profitably,” he said. “This has resulted in impressive growth rates within the growing global personal care market.”

Kao, which makes Attack laundry detergent and Sofina cosmetics, has been looking for acquisitions to use its cashflow of nearly ¥100bn (US$892.8m) a year. It has had seven straight years of record net profit.

In the domestic market, Kao is considering taking a stake in cosmetics and food group Kanebo, Japan’s second cosmetics maker after Shiseido, which is under state-led business rehabilitation.

Kao had tried to buy Kanebo’s cosmetic division in early 2004. In 2002, it bought US-based John Frieda Professional Hair Care for US$482.2m.