Hot off an IPO, The Hut Group has purchased the Perricone MD brand for $60 million in cash. The transaction was far less then the $200 million number floated last December when reports emerged that Lion Capital was exploring a sale.

WHO: Founded in 1997 by dermatologist Dr. Nicholas Perricone, Perricone MD is a science-led topical skincare brand. The brand has approximately 100 product patents and is committed to no-animal testing, clean ingredients, and gluten-free formulations. His Perricone MD line also contains a range of supplements that have garnered a cult following over the years.

The Hut Group (THG) was founded in 2004 by Chief Executive Matthew Moulding and CFO John Gallemore, retails more than 8,000 brands, and operates more than 160 localized websites across 35 languages and 42 currencies. THG has become one of Europe’s largest online retailers of premium beauty brands.

WHY: Perricone MD is sold on the beauty website Lookfantastic.com, which THG also owns. Over the past 12 months, the brand has seen “very significant” sales growth on the website.

IN THEIR OWN WORDS: “The online beauty and skincare sector is growing rapidly, and this acquisition enables us to further strengthen our position as the world’s leading pure-play, specialty beauty brand owner and retailer,” said Matthew Moulding, Founder, Chairman, and Chief Executive Officer of THG. “Perricone MD has a strong heritage, a loyal customer base, and is a truly exciting addition to THG’s beauty portfolio.”

DETAILS:

• THG said it acquired 100 percent of Perricone MD from Lion Capital for $60 million in cash.
• The transaction was for a 1x continuing sales multiple. The brand, it said, is profitable at the EBITDA level, although THG anticipates “minimal impact” on its own balance sheet in the current financial year.
• As Perricone MD is transitioned into a digital-first and global brand, it is expected to be earnings accretive by the end of the financial year 2021, achieving double-digit EBITDA margins “consistent with previous THG Beauty brand acquisitions.”
• Immediately post-acquisition, THG will launch Perricone MD on its THG Ingenuity technology platform.
• Perricone MD will join a beauty portfolio that includes ESPA, Christophe Robin, Illamasqua, Mama Mio, Eyeko, and Ameliorate.
• More than 50 percent of revenues across THG’s existing portfolio of seven existing beauty brands are now generated from direct-to-consumer sales globally online, the company said.
• The Hut Group is now trading on the London Stock Exchange after securing a $7 billion IPO.
• In December of 2019 London-based private investor Lion Capital began working with an adviser exploring the potential sale of the brand and floating a $200 million sale.
• In 2014 TSG Consumer Partners sold its stake in Perricone MD to Lion Capital for an undisclosed amount.