Beauty Manufacturer Intercos Targets Deals to Expand in US

Cosmetics manufacturer Intercos SpA is working on at least one US acquisition to expand its skin and hair care business in the world’s largest beauty market.

The Italian company, a supplier to brands including Estée Lauder Cos. and Dolce & Gabbana, is looking at targets with revenue in the $100 million to $200 million range, chief executive officer Renato Semerari said in an interview. He has identified one buyout candidate and others are on his radar, he said, declining to offer details.

“We are proactively trying to buy a company in the skin and hair care sector in US,” Semerari said. “There is a gap in our industrial footprint in that segment.” 

The contract manufacturer has two makeup plants in the US, but it lacks the capacity in hair or skin care to win over the largest brands or emerging trendsetters, the CEO said. In the Western world, he said, those come “mostly from the States.”

Due diligence for the potential acquisition hasn’t started and a deal is unlikely to be closed by year-end, Semerari said. 

Brianza-based Intercos was founded in 1972 by its 82-year-old chairman, Dario Ferrari, who holds an about 32 percent stake. The company, with a current market value of about €1.17 billion ($1.38 billion), acts as a strategic partner for major brands, developing, producing and packaging beauty products.

“Ferrari established a new business model in the beauty industry,” Semerari said. “His mother was a chemist active in the skincare industry. He understood that makeup was an impulse-purchase market, so he started investing in research and in development to provide clients with innovative products.”

His big breakthrough came when Ferrari formed a strategic partnership with beauty giant Estée Lauder, Semerari said. “Ferrari’s team created a cosmetic powder which ended up in the hands of Leonard Lauder, who fell in love with the formula” and summoned Ferrari to New York to set up a joint venture, he said. 

Tariff Response

The US, with its massive consumer base, is the leading global market for beauty products, according to the Cosmetic, Toiletry & Perfumery Association. While tariffs are rising, Intercos hasn’t felt the pinch because it has been able to shield clients from higher duties by moving production among plants in countries including South Korea, Italy and the US, Semerari said. 

In August, Intercos said it expects revenue this year to rise at a “more moderate pace” than the 5-to-7 percent range it had previously forecast, at constant exchange rates. First-half sales grew 5 percent to €525 million from a year earlier, while adjusted earnings before interest, taxes, depreciation, and amortisation jumped 17 percent to €75 million. 

For the full year, Intercos is forecast to generate adjusted Ebitda of €154.9 million, based on the average estimate of analysts polled by Bloomberg. Semerari said he’s confident the company will meet current Ebitda estimates, despite industry softness.

“Consumers are worried about inflation and global uncertainty,” he said. “In such phases, consumers tend to reduce discretionary spending.”

By Antonio Vanuzzo and Flavia Rotondi

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