Hutchison Buys Ailing Beauty Retailer; Purchase of Marionnaud For $700 Million Bolsters Group's Cosmetics Portfolio

• Published in: The Wall Street journal Asia
• Main Author: Simon Clow and Laetitia Fontaine in Paris and Rebecca Buckman in Hong Kong
• Format: Newspaper Article
• Language: English
• Published: Victoria, Hong Kong Dow Jones & Company Inc 17.01.2005
• Subjects: Accounting; Cosmetics; Executives; Retail stores; Tender offers
• ISSN: 0377-9920

Friday's deal brings to an end a turbulent few weeks for Marionnaud's Mr. [Marcel Frydman], who built up the family-run business from just a handful of stores in France in the mid-1980s to become one of Europe's leading perfume retailers with more than 1,200 stores -- only to see it slide into financial crisis amid the recent accounting scandal. Last month, the 73-year-old executive said that because of accounting errors, the company had incurred a 79 million euros loss for the first half of 2004. The disclosure sent Marionnaud's shares into a nosedive, sparked rumors of an imminent takeover bid and raised serious questions about how the company was being managed. France's stock-market regulator is expected to complete an investigation into Marionnaud's accounting difficulties by autumn. Trading in its shares was suspended in Paris last Tuesday. Hong Kong-based A.S. Watson said in a statement it wants to "revitalize Marionnaud" by leveraging the firm's brand and integrating it into Watson's global chain of retail outlets, which would grow to more than 5,660 health-and-beauty stores with the acquisition. Watson doesn't run any stores in France, though it has more than 3,500 in 10 other countries in Europe plus about 950 stores in Asia.