Over 4 Billion Yuan! L'Oreal And Est é E Lauder Packaging Suppliers Acquired At High Prices

On July 22nd, according to multiple foreign media reports, US private equity firm KKR has agreed to acquire South Korean cosmetics packaging company Samhwa for approximately 800 billion Korean won (approximately 4.136 billion yuan).

This transaction has been finalized through a Share Purchase Agreement (SPA), in which TPG, the current owner of Sanhe, will sell all of its shares to KKR, who will also gain exclusive operating rights to Sanhe.
In November 2023, TPG acquired Sanhe and its four affiliated companies for a purchase price of approximately 300 billion Korean won (approximately RMB 1.551 billion). This means that in less than two years, Sanhe's valuation has increased nearly threefold, and TPG's internal rate of return (IRR) has also reached around 75%, which is rare in today's sluggish market trading environment.
Public information shows that Sanhe was founded in 1977 and is one of the three major manufacturers of cosmetic containers and dispensers in South Korea, jointly leading the packaging market with Yonwoo and Pum Tech Korea. Unlike most of its peers who rely on local Korean companies such as LG Lifestyle and Health, and AmorePacific, Sanhe's nearly 60% of its sales come from global beauty giants such as L'Oreal, Est é e Lauder, and LVMH, while its Korean customers include Tigatine, L'Oreal, AHC, and others.
The core competitive advantage of Sanhe lies in its high profit margin distribution pump technology. This technology has industry-leading precision in dose control, sealing, and infusion, which is crucial for the distribution of high-end cosmetics.
After the acquisition of TPG, Sharp seized the high specification pump technology value of Sanhe, adjusted Sanhe's business portfolio, and committed to positioning Sanhe as a high-end distributor giant. At present, Sanhe's distributor business accounts for 65% of its total sales, while its product bottle business has been reduced.
In addition, the company has launched an online customization platform for independent beauty brands, allowing real-time design and procurement, similar to the semiconductor industry's OEM model.

According to industry professionals' predictions, Sanhe's revenue this year will reach 280 billion Korean won (approximately 1.448 billion yuan), and its earnings before interest, tax, depreciation, and amortization (EBITDA) will reach 62 billion Korean won (approximately 321 million yuan).
It is worth mentioning that major global private equity funds such as Blackstone and Carlyle also participated in the bidding. Among them, Blackstone owns Chinese packaging giant Xia Xin Packaging, while Carlyle is the parent company of Chinese HCP Packaging. Both value the synergy between Sanhe's dispensing technology and their own product portfolio; Due to the lack of a ready-made packaging platform, KKR spent several months striving for it and ultimately succeeded in winning this bid.
It is understood that KKR was founded in 1976 and is headquartered in New York, USA. Its investment areas include private equity, credit, infrastructure, and more.
In May 2020, KKR acquired a 60% stake in the professional hairdressing brand business under the Coty Group for $4.3 billion (approximately RMB 30.852 billion), including professional hairdressing brands Wella and Clairol, hairdressing tool brand ghd, and professional nail art brand OPI. These businesses were split into independent operating companies.
Industry observers believe that this acquisition is a move by global private equity funds to create value by expanding the scale of Korean manufacturers. It can be affirmed that Sanhe's strategy is not only focused on Korean makeup brands aimed at consumers, but also centered on upgrading ODM and packaging technology, which will have stronger growth potential and competitive advantages.