Estée Lauder supplier Intercos targets $200 million US expansion

Cosmetics manufacturer Intercos SpA is working on at least one acquisition in the US to expand its skin and hair care business in the world’s largest beauty market.

The Italian company, a supplier to brands including Estée Lauder Cos. and Dolce & Gabbana, is targeting revenue in the $100 million to $200 million range, its chief executive officer, Renato Semerari, said in an interview. He has identified one buyout candidate and said others are on his radar, though he declined to offer details.

“We are proactively trying to buy a company in the skin and hair care sector in the US,” Semerari said. “There is a gap in our industrial footprint in that segment.”

The contract manufacturer has two makeup plants in the US, but it lacks the capacity in hair or skin care to win over the largest brands or emerging trendsetters, the CEO said. In the Western world, he noted, those tend to come “mostly from the States.”

Due diligence for the potential acquisition hasn’t started, and a deal is unlikely to be closed by year-end, Semerari said.

Brianza-based Intercos was founded in 1972 by its 82-year-old chairman, Dario Ferrari, who holds about a 32% stake. The company, with a current market value of approximately €1.17 billion ($1.38 billion), serves as a strategic partner for major brands, developing, producing, and packaging beauty products.

“Ferrari established a new business model in the beauty industry,” Semerari said. “His mother was a chemist active in the skincare industry. He understood that makeup was an impulse-purchase market, so he started investing in research and development to provide clients with innovative products.”

His big breakthrough came when Ferrari formed a strategic partnership with beauty giant Estée Lauder, Semerari said. “Ferrari’s team created a cosmetic powder that ended up in the hands of Leonard Lauder, who fell in love with the formula,” he said. Lauder then summoned Ferrari to New York to set up a joint venture.

Tariff response

The US, with its massive consumer base, is the leading global market for beauty products, according to the Cosmetic, Toiletry & Perfumery Association. While tariffs are rising, Intercos hasn’t felt the pinch because it has shielded its clients from higher duties by relocating production among plants in countries such as South Korea, Italy, and the US, Semerari said.

In August, Intercos said it expects revenue this year to rise at a “more moderate pace” than the 5% to 7% range it had previously forecast at constant exchange rates. First-half sales grew 5% to €525 million from a year earlier, while adjusted earnings before interest, taxes, depreciation and amortization jumped 17% to €75 million.

For the full year, Intercos is forecast to generate adjusted Ebitda of €154.9 million, based on the average estimate of analysts polled by Bloomberg. Semerari said he’s confident the company will meet current Ebitda estimates, despite industry softness.

“Consumers are worried about inflation and global uncertainty,” he said. “In such phases, consumers tend to reduce discretionary spending.”