Target to Sell Beauty Unit to U.K. Online Retailer THG for $350M

U.K. online retailer THG Holdings will acquire Target's Dermstore.com to scale up its beauty business globally.
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Target  (TGT) - Get Report agreed to sell its Dermstore.com skin-care and beauty business to online retailer THG Holdings for $350 million cash.

The deal price is about 1.8 times estimated revenue for the next 12 months, THG said. 

Acquiring Dermstore.com will enable THG, Manchester, U.K., to build relationships with global beauty brands, the company said. 

The Dermstore.com acquisition also gives THG the opportunity to speed the growth of THG's beauty brands in the U.S.

THG made its stock-market debut in September and became the region's second-largest tech IPO ever, The Wall Street Journal noted.

"A key driver behind the decision to list THG on the London Stock Exchange just over three months ago was to enable the group to make major global investments, such as Dermstore.com," said Chairman and Chief Executive Matthew Moulding in a statement.

"Accessing capital through a listing has enabled us to accelerate our growth plans and build out a global leadership position within the exciting beauty industry. We are delighted to welcome Dermstore.com into our growing portfolio of online beauty assets," he added.

The deal is conditioned on regulatory clearance in the U.S., which THG said it expected to receive in late January. 

The company expects Dermstore.com to add sales of $180 million and adjusted earnings before interest, taxes, depreciation and amortization of $4 million in fiscal 2021.

THG Holdings has also bought two U.K.-based nutrition-products suppliers, Claremont Ingredients and David Berryman, for a combined 59.5 million pounds ($80 million) in cash. 

The businesses are expected to add sales of 15 million pounds and adjusted Ebitda of around 4 million pounds in fiscal 2021, THG Holdings said.

"These two businesses are highly complementary, with Berryman's accelerating our capabilities in drinks range development for the brands within THG Nutrition," said Moulding. "Claremont will play a key role in developing flavors tailored to local tastes across the globe." 

"Together these acquisitions will enable THG to significantly accelerate the launch of further product innovation to global markets, while increasing the proportion of THG Nutrition products wholly manufactured in-house," he added.

At last check the stock of the Minneapolis retail giant traded down 0.7% at $175.12.