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Shiseido to Acquire Bare Escentuals for $1.7 billion

January 15, 2010

I wondered how long Bare Escentuals would go before someone stepped in with a bid for the brand. Well, the day has come. Japanese cosmetics giant, Shiseido Co. Ltd, owner of such brands as NARS, Cle de Peau, John Varvatos, Narciso Rodriguez and of course, the eponymous Shiseido, has offered $1.7 billion for one of the fastest growing brands in prestige cosmetics. In response to the bid, Bare Escentuals, Inc.’s stock is currently +42.2%.

Of course, this acquisition leads me to all sorts of questions. The first being, how will the brand change? Shiseido has a very sophisticated portfolio of brands and a very Japanese way of managing them. How will a warm-and-fuzzy brand built on a community of devoted mineral users and the undeniable ubiquity of its CEO, Leslie Blodgett, (who dubbed Facebook fans “Leslie’s Angels”) fare within such a different corporate environment? One thing is for sure: its international expansion will be accelerated, especially in Asia where Shiseido has a strong presence. (Currently 85% of Bare Escentuals sales are in the U.S.)

Second, what really happens to Leslie Blodgett (aka Complexion Expert aka Mineral Goddess)? The word is that she will trade 40% of her common stock ownership for a continuing interest in Bare Escentuals after the acquisition. My guess? She’ll take the money and run. Or at least make her way to a more behind-the-scenes role in the organization. Perhaps not immediately, but inevitably.

Third and most importantly, how will this impact Bare Escentuals’ product line? Bare Escentuals launched the mineral makeup revolution but the market is already moving beyond minerals, placing real focus on healthy makeup. There is increasingly less emphasis on the mineral content of any given formula and more on the fact that it’s good for you, as evidenced by the overwhelming success of Clinique Even Better Makeup: “Makeup that eliminates the need for makeup.” Seriously – that’s far more compelling than “Makeup so pure you can sleep in it.” Hopefully Shiseido will leverage its expertise in skincare to usher in yet another revolution in skincare makeup.

But what about Leslie’s Angels and the rest of her ilk? Leslie Blodgett has single-handedly marketed Bare Escentuals to the point where her name is nearly synonymous with the brand. Mineral loyalists may not mind her fade into eventual Bare Escentuals obscurity but how will Shiseido market the brand going forward? If nothing else, Blodgett has to remain the face of the brand on QVC, where she first launched the brand into the beauty stratosphere.

All very curious questions! I’m excited to see how it all plays out. What do you think?

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