Last week, news broke that Dutch conglomerate Unilever bought Carver Korea for $2.7B. Carver Korea is a Korean cosmetics company best known for the brand A.H.C. (Aesthetic Hydration Cosmetics). Most of us in the States won't recognize it because its biggest market is China with much less awareness and presence in the US.
Carver Korea was founded in 1999 as a cosmetics supplier to professional salons and they now sell over 1,000 different beauty products in Korea, China, and the US, with AHC as their flagship brand.
A little over a year ago, in July 2016, Goldman Sachs and Bain Capital announced they would buy a majority stake in Carver Korea for $500MM which accounted for about 60%. This would value Carver at around $833MM.
Fast forward one year later, and Goldman Sachs and Bain Capital sold Carver Korea to Unilever for 3x (3x!!!) the value. In one year!
What did Goldman Sachs and Bain Capital do to triple their investment in roughly 12 months? Why did Unilever pay such a hefty amount for Carver Korea?
Data from Sandalwood Advisors shows that AHC sales from China's Tmall, Alibaba's B2C e-commerce site, have been growing significantly well into 2017 even despite the geopolitical tensions due to THAAD.
From March to June 2016, Carver Korea sales on Tmall were around 10.6MM RMB. Compare that to the same time period in 2017 where Carver Korea sales on Tmall went up to 50.8MM RMB. That's a 5x increase. Very impressive. Keep in mind the sales growth was also right when the Chinese government was essentially economically punishing South Korea for supporting anti-missile technology called THAAD. There was an unofficial travel ban to South Korea for Chinese tourists, Lotte stores were being shut down for random violations, and there generally was a lot of anti-Korean sentiment in mainland China.
Unilever's purchase of Carver Korea for $2.7B probably assumes that Carver Korea will continue to show this kind of growth. But will it? Unilever has already bought a brand at its peak sales judging from their acquisition of Dollar Shave Club. L2 Inc data shows that Unilever paid around $6MM per Dollar Shave Club employee in 2016 and now Dollar Shave Club's revenue has flatlined.
Winners here are clearly Goldman Sachs, Bain Capital, and Carver Chairman Lee Sang-Rok.
Loser here may be Unilever who may have potentially bought Carver Korea at the peak depending on if the current growth trajectory continues.