Credit: Shutterstock photoAmerican multinational Proctor & Gamble PG recently announced its acquisition of beauty brand First Aid Beauty for a reported $250 million. First Aid Beauty was founded in 2009 by CEO Lili Gordon. The idea for the company comes from how every household has a first aid kit, so everyone needs first aid beauty products too. FAB is dedicated to creating smart and effective products for sensitive skin by using ingredients which are safe and allergy tested.
What This Acquisition Means for First Aid Beauty
P&G is a company which has acquired many beauty brands before such as Olay, SKII, Aussie and Herbal Essences, along with many others. According to Gordon, FAB's move to P&G will allow the brand to focus on increasing its global presence, while expanding on product development as well. Currently, FAB relies on third parties for their formulas, and under P&G and with PD, they could come up with the formulas themselves.
As of right now, Gordon has 50 employees with her company. Being under P&G now, she will get to keep those employees as well her position of CEO of FAB. However, she will report to the president of P&G's global skin and care, Markus Strobel.
With this acquisition, both companies are mutually benefitting. P&G is looking to gain back that market confidence it had before it sold its longstanding portfolio to Coty Inc. COTY in 2016. Similarly, FAB is looking to gain a wider consumer base by expanding its efforts globally with the help of P&G.
How Will P&G Benefit?
After Proctor & Gamble sold 43 brands from its company to Coty two years ago, they have been trying to regain the same momentum they once had in the beauty/skincare industry. Investors have been reluctant about P&G since it sold a lot of its brand, as they fear it could potentially turn into the next General Electric GE , with the selling of its portfolio.
Since then, P&G has looked towards building its company through acquisitions. With this most recent acquisition, it is looking to build its skin-care portfolio with brands that complement their portfolio and eventually fill the spaces where they are currently not present.
First Aid Beauty is a young brand that has become quite popular, especially amongst millennials. P&G can expect to gain that consumer base, as FAB will have a broad appeal. Today's buying customers look for products which are cruelty free and products that they can use on the go. First Aid Beauty delivers those needs, and therefore, there is potential for this brand to become very valuable in the upcoming years.
P&G will certainly benefit from this acquisition as it will be able to bring in those customers that are already part of First Aid Beauty, as well as the customers it might have lost after selling most of its brands. If FAB succeeds under P&G and becomes a worldwide brand, then this could mean big things for both of them.
Bottom Line
This acquisition is certainly a refreshing start for P&G seeing as First Aid Beauty is a brand loved by many and has been doing quite well over the years. Proctor & Gamble can expect good things from this acquisition and it seems clear they made the right decision.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
