Key Takeaways:

• Shanghai Jahwa will sell 19% of its shares in Sephora Shanghai and Sephora Beijing to focus on its core business.
• Sephora Asia, an indirect subsidiary of LVMH, holds the remaining 81%.
• Shanghai Jahwa's collaboration with Sephora began in 2004.

Shanghai Jahwa exited Sephora joint ventures to focus on its main business.

WHO: Sephora Shanghai and Sephora Beijing were established as joint ventures between Shanghai Jahwa and Sephora Asia in 2004 and 2006, respectively. Sephora Asia, a wholly owned subsidiary of LVMH Group, holds an 81% stake, while Shanghai Jahwa holds 19%. Sephora has over 300 stores in China.

Shanghai Jahwa, one of the oldest and largest domestically owned personal care and household product enterprises in China, traces its roots to 1898 and was the first domestic cosmetics company to list on the Shanghai Stock Exchange in 2001. Its core brands include Herborist, Liushen, Maxam and Dr. Yu (Yuze).

WHY: China's retail landscape has changed, and Sephora and Shanghai Jahwa have diverged. The company will focus on its three core brands, Liushen, Herborist, and Yuze, and is investing more resources in brand building and online channels. For Sephora, it consolidates control of its China operations as the market shifts.

DETAILS:

• Shanghai Jahwa plans to sell its 19% stake in Sephora Shanghai and Sephora Beijing to Sephora Asia for €70 million ($82.7 million), according to a company filing.
• After the transaction is completed, Shanghai Jahwa will completely exit the two joint ventures and expects an after-tax gain of about RMB 474 million ($70.5 million).
• In 2004, Sephora Asia and Shanghai Jahwa jointly established Sephora (Shanghai) Sales Co., Ltd.