BEIJING, Mar 28, 2007 (SinoCast China Financial Watch via COMTEX) -- Johnson &Johnsonhas purchased a 100 percent stake in Beijing Dabao Cosmetics Co., Ltd., a local popular cosmetics producer, rumors said.Dabao has been sold on the China Beijing Equity Exchange since February 27,2007,and was just erased from the exchange's website on March 26, signaling that it has found the buyer.Though it has not released who has won the bid, Johnson & Johnson is likely tobethe winner, told sources close to the deal. Still, they did not give the price and other details.Engaged in the research and production of skincare, hair- care, perfume andothercosmetics products, Dabao put itself for sale at a price of CNY 2.3 billion. The price is believed to be too high for homegrown peers and onlyforeignbrands can afford it.
As scheduled, if the seller receives a single intention by March 26, it willreachthe agreement directly with the bidder. If it receives more than one intentions, the seller will select a winner based on the conditions it offered.Ifno intention comes, the deal will be extended every five working days untilitis sealed.
Several foreign giants, including Johnson & Johnson, Avon and Unilever, haveshowninterest in the Beijing company.
Johnson & Johnson China declined to comment on the rumor.The US personal-care giant since last August has contacted Dabao for the 100percentstake, earlier reports said. But the buyer denied. They eventually failed to come to an agreement due to the disagreements on how to deal withDabao'sstaff, according to the reports.
In Dabao's 100 percent stake, 83.42 percent is state equity and the rest isownedby its staff. A huge amount of deaf and blind staff will hence be a main problem for any bidder to face after acquiring the company.Unilever, who traces its history in China back to the 1920s, early this monthwasreported to participate in the bid as the only rival to compete against Johnson & Johnson.Currently, Unilever runs a wide range of brands, such as Lux, Dove, Hazeline,Pond's,Omo, Comfort, Zhonghua, Lipton, Knorr and Wall's, in the 1.3-billion population nation.Dabao required any bidder to offer a bank guarantee worth up to CNY 2.3 billion,acondition difficult for all bidders to follow. The deal is hence believed noteasyfor Unilever to win.
But the European foods, home care and personal care manufacturer has been deeplyattractedby the potentially big cosmetic market in China thanks to the know-how of running the Zhonghua Toothpaste here.To bid for Dabao, Unilever is likely to give up the plan of buying into NafineChemicalIndustry Group Co. Based in the central province of Shanxi, Nafine Group runs one of China's best-known washing powder brands KEON.The two have de facto talked for several times.
China's cosmestics market has been regarded a bonanza for several foreignpersonal-carebrands.
France-based L'Oreal years ago acquired Mininurse, a popular brand who has erect280,000outlets across the country. Germany's Beiersdorf, the owner of Nivea brand, has joined hands with C-Bons Group, as well.Registered in Hong Kong, C-Bons has been present in personal care, real estateandpharmaceutical. The hair care brands in the mainland, its main profit resources, are Slek and Maestro.(USD 1 = CNY 7.73)