Skincare deal gives fresh face to L'Oreal in US

French cosmetics giant L'Oreal said Tuesday it had agreed to buy three leading skincare brands from Valeant for $1.3 billion in a move set to give its US offering a facelift.

The acquisition expands the group's presence in the United States and builds on its purchase last summer of the US brand IT Cosmetics for $1.2 billion.

The cash deal will see L'Oreal acquiring the CeraVe, AcneFree and Ambi brands from the Quebec-based pharmaceutical firm in a purchase it said would nearly double the US sales of its active cosmetics division which focuses on aesthetic dermatology.

"The acquisition of CeraVe, AcneFree and Ambi strongly complement L'Oreal's brand portfolio," said Frederic Roze, president and chief executive of L'Oreal USA in a statement.

"These three brands, built on strong relationships with health professionals and widely distributed, will nearly double the revenue of our Active Cosmetics Division in the US and will help us satisfy the growing demand for active skincare at accessible prices."

The Active division includes dermocosmetic brands such as La Roche-Posay, Vichy and SkinCeuticals.

- A growing US footprint -

Founded in 2005, CeraVe offers a range of skincare products including cleansers, moisturisers and sunscreens as well as a baby line.

It is one of the fastest growing skincare brands in the US with an average growth over the past two years of over 20 percent, L'Oreal said.

Its sales have enjoyed "a favourable dynamic" driven by consumers looking for products endorsed by health professionals for their effectiveness for sensitive skin, Active division president Brigitte Liberman told AFP.

Predominantly sold in the US, the brand's dynamism and its potential on the international market justified the high price paid by L'Oreal, she said.

AcneFree provides acne treatments and Ambi offers products for multicultural consumers.

The acquisition expands the firm's footprint in the United States where the demand for beauty products is flourishing: in the first nine months of 2016, L'Oreal's North American sales grew 5.4 percent compared with just 0.1 in western Europe.

Over the years, North America has become L'Oreal's most important division, accounting for 27 percent of its overall sales.

- Valeant efforts on debt -

The sale comes after a difficult year for the Canadian firm, which grew from a small pharmaceutical company to a global giant in the span of a decade mainly due to a growth strategy based on acquisitions.

The former Wall Street darling has come under fire for steep price hikes on drugs and is currently under investigation in the US over alleged accounts manipulation, with former senior executives being probed for fraud.

Its market capitalisation has collapsed from more than $90 billion in the summer of 2015 to a current value of $5.2 billion.

The embattled drugmaker is also struggling to offload a heavy burden of long-term debt, which stood at just over $30 billion at the end of the third quarter, with Valeant saying the sale would help it "permanently repay term loan debt".

The move comes a day after the drugmaker said it had agreed to sell its Dendreon cancer business to Chinese conglomerate Sanpower for $820 million.

Ahead of the open in New York, Valeant shares rose sharply in pre-market trading, gaining around 12 percent while in Paris, L'Oreal fell to 0.67 percent to 170.20 in early afternoon trade in line with general market sentiment.