{"id":920,"date":"2021-01-19T09:09:05","date_gmt":"2021-01-19T09:09:05","guid":{"rendered":"https:\/\/www.westcoastcapital.co.uk\/acquisition-of-dermstore-com-and-major-investment-in-thg-nutrition-product-development-capability\/"},"modified":"2021-01-19T09:09:05","modified_gmt":"2021-01-19T09:09:05","slug":"acquisition-of-dermstore-com-and-major-investment-in-thg-nutrition-product-development-capability","status":"publish","type":"post","link":"https:\/\/www.westcoastcapital.co.uk\/acquisition-of-dermstore-com-and-major-investment-in-thg-nutrition-product-development-capability\/","title":{"rendered":"Acquisition of Dermstore.com and major investment in THG Nutrition product development capability"},"content":{"rendered":"<ul>\n<li>\n<strong>350m acquisition of <\/strong><strong>Dermstore LLC (\u201cDermstore.com\u201d)<\/strong><strong>, the US number 1 pure-play online retailer of prestige skincare &amp; specialty beauty brands, subject to regulatory approval in the United States<\/strong>\n<\/li>\n<\/ul>\n<ul>\n<li><strong>Two acquisitions in the THG Nutrition supply chain, investing \u00a359.5m across in-house brand building, product innovation and manufacturing expertise<\/strong><\/li>\n<\/ul>\n<p>THG Holdings plc (\u201cTHG\u201d or the \u201cGroup\u201d), the global technology platform company specialising in taking brands direct to consumers (\u201cD2C\u201d), <a>announces <\/a>that it <a>has agreed to acquire Dermstore.com, the US number 1 pure-play online retailer of prestige skincare and specialty beauty brands for $350m in cash from US retailer Target Corporation<\/a>. The deal represents a c. 1.8x 12 months\u2019 forward revenue multiple and is subject to regulatory approval in the United States.<\/p>\n<p>The Group has also acquired two of its long-standing UK-based nutrition product suppliers, Claremont Ingredients Limited (\u201cClaremont\u201d) and David Berryman Limited (\u201cBerryman\u2019s\u201d), for a combined purchase price of \u00a359.5m payable in cash.<\/p>\n<p><strong>Dermstore.com \u2013 Strategic rationale<\/strong><\/p>\n<p><a>Founded in 1999, Dermstore.com was established to provide online access to professional grade skincare in the US. Through curated, expert-driven content and a focused product assortment, Dermstore.com has established itself as the US authority for professional skincare brands online<\/a>.<\/p>\n<p>THG\u2019s stated ambition is to be the global digital partner of choice across the beauty industry, powering channel shift from offline to online. This strategy is based upon four key pillars:<\/p>\n<ol type=\"1\">\n<li>Expanding Lookfantastic.com to become the global leader in online multi-brand distribution for the beauty industry<\/li>\n<\/ol>\n<ul>\n<li>Developing a unique, rapidly growing, digitally focused stable of its own prestige beauty brands, providing margin enhancement and differentiation (Perricone MD, ESPA, Christophe Robin, Grow Gorgeous, Illamasqua, Eyeko, Mio Skincare and Ameliorate)<\/li>\n<li>Providing Ingenuity services directly to the beauty industry, enabling it to build successful global D2C channels to capitalise on the rapidly increasing channel shift<\/li>\n<\/ul>\n<p>The Dermstore.com acquisition enhances these four pillars of THG\u2019s beauty strategy by substantially enhancing its relationships with the key global beauty brands. THG will be able to increase the scale of its beauty box business by accessing the Dermstore.com customer base, which will in turn unlock incremental marketing revenue. The Dermstore.com acquisition also <a>provides the opportunity to accelerate the growth of THG\u2019s own beauty brands via a new and large US customer base<\/a>.<\/p>\n<p><strong>Claremont and Berryman\u2019s \u2013 Strategic rationale<\/strong><\/p>\n<p>Claremont is the UK\u2019s leading independent flavour manufacturing and development laboratory for sports nutrition and beverages. Berryman\u2019s is recognised as one of the UK\u2019s foremost fruit-based ingredients specialists, with significant canning and bottling capabilities. Both Claremont and Berryman\u2019s are BRC AA Grade accredited manufacturers.<\/p>\n<p>THG is committed to investing in and building best-<a>in-class product innovation and manufacturing facilities <\/a>in support of its THG Nutrition portfolio of global, digital-first brands including Myprotein, Myvegan, Myvitamins, Exante and Command. These acquisitions <a>reflect a continuation of this vertical integration strategy <\/a>and will transform its speed to market and level of product innovation in its performance nutrition brands.<\/p>\n<p>Both Claremont and Berryman\u2019s will continue to generate revenue from third party customers, who will benefit from THG\u2019s investment commitment and scale sourcing benefits. The additional facilities will broaden the range of products that the Group can manufacture for its THG Ingenuity clients, providing an opportunity for brands to add THG developed and manufactured nutrition products to their online D2C websites.<\/p>\n<p><strong>Financial impact<\/strong><\/p>\n<p>Antitrust clearance is expected to be received in late January 2021. Dermstore.com is therefore expected to contribute for 11 months of THG\u2019s 2021 financial year, adding sales of c. $180m (c. \u00a3135m) and adjusted EBITDA of c. $4m (c. \u00a33m).\u00a0<\/p>\n<p>Through delivery of planned synergies, management anticipate adjusted EBITDA margins to increase and move in-line with Group adjusted EBITDA margins within 18 to 24 months\u2019 post acquisition.<\/p>\n<p>The acquisitions of Claremont &amp; Berryman\u2019s are expected to add sales of c. \u00a315m and adjusted EBITDA of c. \u00a34m in FY 2021.\u00a0<\/p>\n<p>THG will announce its Q4 trading update on Tuesday 12 January 2021.<\/p>\n<p>Matthew Moulding, Chairman and CEO of THG commented:<\/p>\n<p><em>\u201cA key driver behind the decision to list THG on the London Stock Exchange just over three months ago was to enable the Group to make major global investments, such as Dermstore.com. Accessing capital through a London listing has enabled us to accelerate our growth plans and <a>build out a global leadership position within the exciting beauty industry<\/a>. We are delighted to welcome Dermstore.com into our growing portfolio of online beauty assets.<\/em><\/p>\n<p><a><em>\u201cWe are also pleased to announce the acquisitions of Claremont and Berryman\u2019s. <\/em><\/a><a><em>These two businesses are highly complementary, with Berryman\u2019s accelerating our capabilities in drinks range development for the individual brands within THG Nutrition<\/em><\/a><em>. Claremont will play a key role in developing flavours tailored to local tastes across the globe. Together these acquisitions will enable THG to significantly accelerate the launch of further product innovation to global markets, while increasing the proportion of THG Nutrition products wholly manufactured in-house.\u201d<\/em><\/p>\n<p>THG was advised by Ashish Burman, Cyrus Deboo and Phillip Kwun of Stifel for M&amp;A, Saee Muzumdar and Andrew Kaplan of Gibson Dunn for legal, John Moth and Guan Yeo of KPMG for financial due diligence and Anthony Passalaqua and Jenny Hessenbruch of Deloitte for tax due diligence.<\/p>\n<p>The post <a rel=\"nofollow\" href=\"https:\/\/www.thg.com\/news\/acquisition-of-dermstore-com-and-major-investment-in-thg-nutrition-product-development-capability\/\">Acquisition of Dermstore.com and major investment in THG Nutrition product development capability<\/a> appeared first on <a rel=\"nofollow\" href=\"https:\/\/www.thg.com\/\">The Hut Group (THG)<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>350m acquisition of Dermstore LLC (\u201cDermstore.com\u201d), the US number 1 pure-play online retailer of prestige skincare &amp; specialty beauty brands, subject to regulatory approval in the United States Two acquisitions&#8230;<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Acquisition of Dermstore.com and major investment in THG Nutrition product development capability - West Coast Capital<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.westcoastcapital.co.uk\/acquisition-of-dermstore-com-and-major-investment-in-thg-nutrition-product-development-capability\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Acquisition of Dermstore.com and major investment in THG Nutrition product development capability - West Coast Capital\" \/>\n<meta property=\"og:description\" content=\"350m acquisition of Dermstore LLC (\u201cDermstore.com\u201d), the US number 1 pure-play online retailer of prestige skincare &amp; 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