As the global popularity of K-beauty rises, the scale of mergers and acquisitions (M&A) related to the domestic cosmetics industry has surpassed KRW 3 trillion this year. This marks the largest scale in eight years, with the transaction scope expanding beyond brand-centered M&A to include packaging, beauty medical devices, and original design manufacturing (ODM).

According to the small and medium-sized enterprise M&A advisory firm MMP on the 25th, there were a total of 21 M&A deals in the domestic cosmetics industry from January to October this year, with a transaction amount totaling KRW 3.1756 trillion. This represents a 26.9% increase compared to last year's KRW 2.5818 trillion (18 deals). It is the first time in eight years that the amount has surpassed KRW 3 trillion since KRW 3.3312 trillion in 2017.

The most significant feature of this year's M&A in the cosmetics industry is the shift in focus from brands to a broader beauty sector, including packaging materials, special ingredients, beauty medical devices, and ODM. There is a noticeable trend of securing the overall foundation of the K-beauty ecosystem, including manufacturing, packaging, and technology, beyond merely acquiring popular brands.

The largest deal this year was the acquisition of Samhwa by the global private equity firm Kohlberg Kravis Roberts (KKR). KKR acquired Samhwa for KRW 733 billion, marking the highest price ever for a single item (packaging). Established in 1977, Samhwa is the leading domestic packaging company supplying premium packaging to major brands such as Amorepacific and LG Household & Health Care.

There was also a clear trend of combining brand and distribution platforms in investments. Seorin Company, which owns the basic cosmetics brand 'Round Lab,' was sold to Gudai Global for KRW 600 billion. Gudai Global has rapidly built a global distribution portfolio by consecutively acquiring representative K-beauty indie brands such as 'Joseon Beauty' and 'TIRTIR.' The overseas sales proportion of the acquired brands exceeds 60%. The acquisition of Manyo Factory by K-Beauty Holdings for KRW 190 billion also drew attention. Manyo Factory maintains a top sales position in the skincare category on Amazon in the United States.

In the beauty medical device sector, large-scale deals continued. VIG Partners acquired Viol, which owns RF-based lifting devices 'Oligio,' 'Scarlett,' and 'Sylfirm X,' for KRW 521.3 billion. Viol is recognized for its technological value amid the expanding trend of beauty medical device exports, being one of the brands widely used in hospitals and clinics domestically and internationally.

Color cosmetics ODM company C&C International was sold to Ascent Equity Partners for KRW 285 billion. C&C International has grown as a strong player in the 'point makeup' ODM sector, such as lip and eye products, securing global clients like L'Oréal and Estée Lauder Group.

Last year, domestic cosmetics exports reached USD 10.2 billion (approximately KRW 15 trillion), a 20.6% increase from the previous year, marking a record high. In the first half of this year (January to June), exports were USD 5.51 billion (provisional), a 14.8% increase compared to the same period last year. The number of export destinations has expanded to 176 countries. As K-beauty exports continue to thrive, global investors' participation in M&A is increasing.

Park Jong-dae, a researcher at Meritz Securities, analyzed, "The global momentum of K-beauty is just beginning, with exports increasing to Europe and the Middle East following Japan and the United States," adding, "The value of the value chain, including ODM, packaging, and distribution, is rising together."

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