Hair Care Firms Get Ownership Makeover

The sale of Soft Sheen and Johnson Products signal industry consolidation

It’s on! The battle to dominate the ethnic hair care market started in earnest this past July when two multinational cosmetic companies staked claim to a share of the $4 billion pie and its 33 million consumers. The makeover of the ethnic hair care market looked more like a complete overhaul when the No. 1 and No. 2 black hair care product manufacturers were both sold: BE 100s concern Soft Sheen Products Inc. went to L’Oreal S.A. for an undisclosed sum, and Johnson Products to Carson Products from IVAX Corp. for $70 million.

L’Oreal’s purchase of Chicago-based Soft Sheen, maker of Optimum, Mizani and Wave Nouveau, throws the Paris-based company into the fray with other cosmetic giants looking to expand their reach to African Americans. The sale of Soft Sheen No. 18 on the BE INDUSTRIAL/SERVICE 100 list with $95 million in sales and a leader in both the retail and salon categories–had been rumored among insiders for weeks leading up to the deal.

“We had plenty of overtures and were contacted by L’Oreal last year,” says Terri Gardner, former president and CEO of Soft Sheen, who will remain on as president of the new Soft Sheen division. “We saw a strategic partner with muscle through which we could fulfill our vision for the company. Going forward, this opportunity will magnify Soft Sheen’s success on multiple levels.”

Gardner will report to Guy Peyrelongue, president and CEO of Cosmair, L’Oreal’s U.S subsidiary. “Adding Soft Sheen promotes endless possibilities,” says Peyrelongue. “L’Oreal must have the ability to fill specific beauty needs of women all over the world, and Soft Sheen has the proven track record to help achieve this goal.”

Just weeks earlier, Carson Products, the top producer of ethnic hair care products in the U.S., added Johnson Products to its coffers for $70 million cash. “Johnson is a well-established brand that fits well and complements our current brands. This acquisition has a lot of synergy for Carson,” says its chairman, Leroy Keith.

But the purchase was one phase in a shakeup at Carson that saw Keith relinquish his title as CEO of the company in June. Three years ago, Keith crafted a $96 million leveraged buyout of the firm that catapulted him to Carson’s helm; he will remain on as chairman. But Carson has tapped a seasoned consumer products marketer, Gregory J. Andrews, former vice president and general manager of a Colgate-Palmolive subsidiary in Buenos Aires, Argentina, to be the new CEO.

“With our aggressive acquisition strategy, we needed to share the responsibilities of day-to-day operations so I can focus more on international expansion. With Gregory’s background, this job was tailor made for him,” says Keith.

The Savannah, Georgia-based Carson already produces Dark & Lovely, Excelle, Beautiful Beginnings and Dark & Natural. Adding Johnson’s products, including its relaxers Gende Treatment and Ultra Sheen, Bolsters its position in the lucrative relaxer category. Bob Pierce, Carson’s CFO, estimates the acquisitions, plus the sale of the Cutex and Dermablend lines, will bring the company’s revenues to about $150 million.

And analysts

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