April 26, 2024

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[THE INVESTOR] South Korean cosmetics maker It’s Skin said on Feb. 17 that it will merge with its parent Hanbul Cosmetics in a bid to strengthen its brand presence globally, especially in China.

Under terms of the transaction, It’s Skin will absorb Hanbul’s research and development center as well as production facilities including a plant under construction in Huzhou, China.

After the merger, the companies will change the name to It’s Hanbul. Hanbul was the largest shareholder of It’s Skin, holding a 50.73 percent stake.

“Through this merger, It’s Hanbul will become a leader in the industry by transforming itself into a comprehensive cosmetics company that will cover all aspects of R & D, manufacturing facilities, marketing, and sales,” It’s Skin CEO Yoo Geun-jik said.

The company will further intensify its focus on China, one of the world’s largest market for beauty products.

By acquiring Hanbul’s plants both in Korea and China, the company will seek to step up original equipment and design manufacturing businesses, it said.

Stung by geopolitical tensions between South Korea and China -- the market that accounts for a growing portion of the firm’s revenue -- its operating profit and stock price plunged last year.

To offset the losses this year, the beauty product maker will produce and conduct marketing in China to match the rapid changes of Chinese consumer tastes product planning and development will be done in Korea.

On the news, the company’s stock rose 11.2 percent to close at 47.650 won (US$41.54).

On Feb. 2, It’s Skin reported that its 2016 operating profit dropped 34.4 percent on-year to 73.3 billion won while its sales fell 13.6 percent to 267.3 billion won.

By Park Han-na (hnpark@heraldcorp.com)