TPG to fully acquire cosmetics container firm Samhwa at around $237 mn

Texas-based private equity firm TPG Inc. is poised to fully acquire Samhwa Co., a South Korean cosmetic packaging supplier to global beauty powerhouses like L'Oréal S.A., the Estée Lauder Companies Inc. and Chanel, according to banking sources on Friday.

TPG has agreed to buy a 100% stake in Samhwa and controlling shares in some major affiliates, held by Chief Executive Cho Seong-hwan, Cho’s father and Samhwa founder Cho Hwi-cheol and affiliated persons. The sales price is in the mid-300 billion won ($236.9 million) range, sources said.

Samhwa is expected to partner with global cosmetics firms within TPG’s portfolios, such as Anastasia Beverly Hills LLC that is best known for its eyebrow products, according to industry sources. The private equity firm acquired a 38% stake in Anastasia in 2018, according to Bloomberg.

CEO Cho will buy a minority stake in Samhwa again as the products container manufacturing business can generate steady cash flow, while cosmetics brand operators face ups and downs amid economic fluctuations or changes in beauty industry trends, sources said.

It will mark TPG’s first investment in a Korean firm since 2020, when the private equity manager injected 250 billion won in fintech firm KakaoBank Corp. via a rights offering. Among its Korean portfolio companies are mobility platform Kakao Mobility Co., luxury vinyl tiles maker Nox Corp. and dietary supplement maker Health Balance.

TPG has closed some major deals in Korea, such as selling off Hanaro Telecom to SK Telecom Co. at 1.1 trillion won in 2008. It withdrew from its Seoul office in the same year and came back in 2016, tapping Sanghoon Lee and Scott ShinWon Yoon as the head and vice head of the Korea office, respectively. Lee and Yoon were respectively ex-Korea head and vice president at Morgan Stanley Private Equity.

SALES TO GLOBAL COSMETICS GIANTS

Samhwa was founded in 1977 as an electronics and daily supplies mold maker. The company and its affiliates, such as plastic molding maker Samhwa P&T Co., posted around $35 billion won in earnings before interest, taxes, depreciation and amortization (EBITDA) last year.

Samhwa’s business rapidly increased in the 2010s with sales to Korea’s low-priced cosmetic brands like Etude and Innisfree. Backed by the boom of Korean beauty products, its revenue soared from 29.8 billion won in 2012 to 89.1 billion won in 2017 and surpassed 100 billion won the following year.

As the popularity of Korean cosmetic brands waned in China in recent years, the company focused on its sales to global cosmetics behemoths like L'Oréal, Estée Lauder, Shiseido and LVMH Moët Hennessy Louis Vuitton.

The company is accelerating eco-friendly container manufacturing. In March of this year, it closed a partnership with CJ CheilJedang Corp., the food and bio unit under CJ Group, to develop biodegradable packaging for beauty items. The products are fully biodegradable and don’t emit microplastics, according to Samhwa.

Write to Jong-Kwan Park and Jun-Ho Cha at pjk@hankyung.com

Jihyun Kim edited this article.