Warpaint London, the specialist supplier of color cosmetics and owner of the W7 and Technic brands, has acquired the company's US distributor, Marvin Leeds Marketing Services Inc.

WHO: New York-based Marvin Leeds Marketing currently derives approximately two-thirds of its revenue through the distribution of Warpaint London's W7 products, with the remainder being through the sale of other branded cosmetics. Leeds Marketing was the Company's exclusive distributor in the US until January 2018 and sells products to major "off-price" retail groups in the US and Canada, including the TJX Companies and Bealls Outlet Stores. Recently Leeds Marketing has opened new accounts for W7 and other Warpaint brands with a number of retailers including Century 21 (12 stores), Forever 21 (506 stores), and Macy's Backstage (72 stores).

Warpaint London is a UK-based color cosmetics business with two divisions: close-out and own-brand. The larger division, own-brand, consists primarily of the group’s flagship business, W7. The company acquired Retra Holdings in 2017, adding a group of owned and licensed brands, such as Technic, Body Collection, and Man’s Stuff, to the portfolio.

WHY: The US is the world's largest color cosmetics market by value, and the transaction will provide greater control over North American sales activities facilitating international expansion. In addition, the acquisition is expected to open up expansion opportunities in Central and South America, where customers prefer to be served by a US-based entity.

IN THEIR OWN WORDS:  Sam Bazini and Eoin Macleod, Joint Chief Executives of Warpaint, said, "We see the acquisition of Leeds Marketing as a further important milestone in our growth story. Since admission to AIM, we have focused on international expansion and the USA is central to that strategy. The Acquisition will allow Warpaint and its brands direct access to some of our key existing customers, as well as opening up a number of new opportunities in the USA and the Americas more widely. We look forward to integrating the Leeds Marketing staff into the existing Warpaint team and continuing to expand the routes to market for our products."

DETAILS:

• Warpaint London has acquired the Company's US distributor, Marvin Leeds Marketing Services Inc.
• The terms of the acquisition consist of US$2.16 million in cash, subject to an adjustment depending on the net assets acquired which are expected to be US$0.8 million. The company has paid US$2 million in cash with two further payments of $80,000 due on 30 September 2018 and 31 December 2018, subject to the net asset adjustment.
• In 2017 according to Market Screener, Leeds Marketing had revenue of US$5.9 million and profit before tax (adjusted for non-recurring costs after completion of the acquisition) of approximately US$0.4 million. Net assets, adjusted for a capital reorganization on completion of the acquisition, as of 31 December 2017 were US$1.1 million.