TheFaceShop deal won't give LG Houshold leg-up over rival: experts

By Nam Kwang-sik
SEOUL, Nov. 25 (Yonhap) -- LG Household & Health Care's takeover of TheFaceShop
likely will not give the cosmetics maker the leg-up it needs to overcome larger
rival Amorepacific Corp, market watchers said Wednesday.
On Tuesday, LG Household of South Korea announced it has decided to buy
TheFaceShop, the country's No. 3 cosmetics maker, for 420 billion won (US$363
million) to boost its competitive edge. LG Household, currently No. 2, purchased
a 90 percent stake or 1.93 million shares in the cosmetics producer.
"The acquisition is forecast to allow LG Household to increase its market share
to 16 percent this year, while Amorepacific is expected to be the top market
share holder with 26 percent," Kim Mi-na, an analyst at Daewoo Securities Co.
said in a report.
Amorepacific recorded 1.27 trillion won in sales last year, followed by LG
Household with 534.1 billion won and TheFaceShop with 235.1 billion won.
"LG Household, however, will likely dominate the local low and medium-price
cosmetics market through the takeover of TheFaceShop, which is leading the low
and medium-price cosmetics market," said Son Ho-ju, an analyst at LIG Investment
Securities Co.
TheFaceShop may benefit from the deal as LG Household could make up for its weak
points in research and development, logistics and overseas business, Son added.
Local brokerage houses like Daewoo Securities, Woori Investment Securities and
LIG Investment Securities raised earlier in the day their ratings on LG Household
to "buy" after the announcement of the deal.
Shares of LG Household shot up 6.13 percent to 286,000 won as of 11:10 on the
Seoul bourse.
ksnam@yna.co.kr
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