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Retail giant Wesfarmers is looking to firm up its position in the cosmetic-treatment market, with the boss of its takeover target Silk Laser saying consumers are still ready to spend up on anti-ageing and hair-removal treatments, despite tougher economic times.
Silk Laser Australia’s share price surged by more than 20 per cent on Thursday after Wesfarmers-owned Australian Pharmaceutical Industries (API) confirmed it had lobbed a takeover bid for the laser hair removal and cosmetic injectables business at $3.15 per share.
Silk Laser Clinics listed on the ASX in 2020.Credit:
The offer, which values Silk Laser at $169 million, is yet another push from Wesfarmers into the health and wellness space after the group’s purchase of Priceline operator API in 2022.
That deal created a new Wesfarmers Health division, which generated $2.7 billion in revenues and $27 million in earnings for the group in the first half of the 2023 year.
Wesfarmers’ purchase of API also included cosmetic treatments business Clear Skincare. Wesfarmers told investors on Wednesday evening that the purchase of Silk will complement its presence in the sector.
Silk Laser founder and managing director Martin Perelman told this masthead that he believed a sale to Wesfarmers would be a good deal for Silk’s franchisees. “API loves the business we have built – they’re coming on board to enhance it,” he said.
Silk Laser Clinics CEO Martin Perelman said the sector continues to grow fast. Credit: Brad Griffin
He said Australia’s non-surgical cosmetics industry was growing well and that Silk’s services would remain in demand even in times of spending slowdowns.
“Our customers place a higher priority on regular cosmetic injections and beauty treatments than they do buying the latest fashion item, and that sentiment makes us optimistic about Silk’s trading conditions, even in tougher economic conditions,” he said.
Perelman noted that the deal would help API’s reach in the Australian cosmetics market. “This is a strategic acquisition for API and one that helps them expand their footprint further in the non-surgical aesthetic market,” he said.
Silk Laser listed on the ASX in 2020 at an offer price of $3.45 per share, and while the stock went as high as $5.20 in 2021, it has since struggled and shares have dipped below the $2 mark recently. The stock hit highs of $3.04 on Thursday.
One of the group’s largest investors, Wilson Asset Management, will back Wesfarmers’ offer unless a better bid emerges.
Both Wesfarmers and fellow retail giant Woolworths have intensified their interest in health and wellness. Woolworths’ Healthy Life division already sells a range of beauty supplies and vitamins, and recently launched a telehealth service with access to doctors, naturopaths and nutritionists.
Wesfarmers boss Rob Scott told investors at the company’s half-year results in February that the Priceline business saw good growth in health and beauty in the first six months of this year thanks to an increase in foot traffic to stores.
Analysts are upbeat about the opportunities on offer in the hair removal and cosmetics market. “[Silk] is ideally positioned for long-term and profitable growth, with a very attractive and large addressable market,” Shaw and Partners said in a note to clients earlier this year.
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