On the 2nd of March, the Chinese cosmetics start-up company Yatsen entered into a definitive agreement to acquire the prestigious skincare brand Eve Lom from Manzanita Capital.


Yatsen is a leader in the dynamic China beauty market and it is the holding of the cosmetics and skincare brand Perfect Diary, which already enjoys an excellent brand reputation in the domestic market and ranks among the top make-up brands online sales next to the giants like L’Oréal and Shiseido. The company has built a platform with core capabilities disrupting the traditional beauty industry and delivering greater value to digitally native customers. Indeed, on top of the offline touchpoint, customer loyalty is mainly built across all major e-commerce, social and content platforms in China. Growth has skyrocketed at Yatsen since its founding in 2016, which has registered $540 million in 2019, quadrupling its turnover to the previous year. Moreover, the group has impressed the capital market with a $617 million initial public offering on NYSE in November 2020.

Manzanita Capital is a Washington-based specialist investor in entrepreneurs and emerging brands in luxury and premium beauty. Within its portfolio, there is Eve Lom, founded in 1935 by the renowned facialist Eve Lom in the UK. The skincare collection is based on the belief that the secret to radiant skin begins with the perfect cleanse. In the 35 years since the launch of the iconic Eve Lom Cleanser, the brand combines high-quality natural ingredients with the latest scientific innovations. Eve Lom is already a global brand, especially appreciated in Asia markets.

The deal

Yatsen has been on the hunt for potential acquisitions to diversify its product portfolio and Eve Lom seemed to be a perfect match to enrich product offering and brand-building. The size of the deal is not yet disclosed, but Bloomberg reported in February that Manzanita was looking to sell Eve Lom for as much as $200 million. A definite agreement is already achieved and the deal is going to be closed in the following few weeks. Manzanita will retain a minority stake in the business and continue to act as a strategic partner. From the sell-side perspective, the new connection with the Chinese holding represents a unique opportunity to expand its presence in the Asian Market, leveraging on Yatsen’s reach.

Now looking forward to the conclusion of the deal, some final thoughts may arise naturally. In the Chinese cosmetics market, the Western brand has always enjoyed a quite insurmountable position, as they are a synonym of quality and safety. Local brands, instead, are generally known to be a more affordable second choice. However, we are recently witnessing the success of Chinese startups, winning over GenZ with more localized options and presenting the Chinese heritage as a fundamental asset characterizing their products. That is what allowed Perfect Diary to emerge and succeed, now able to take over 35-years-old Western skincare brand Eve Lom. This symbolically represents the beginning of a new era in the cosmetics world, in which Chinese brands redefine their position.

Credits to: Francesca Hu

Categories: Business Post


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