As the global popularity of K-beauty rises, the scale of mergers and acquisitions (M&A) in the domestic cosmetics sector has surpassed KRW 3 trillion this year. This marks the largest scale in eight years, influenced by the expansion of beauty industry M&A from brand-centric to areas such as packaging, beauty medical devices, and original design manufacturing (ODM).

According to MMP, a small and medium-sized enterprise M&A advisory firm, 21 M&A deals were completed in the domestic cosmetics industry from January to October this year, with a total transaction value of 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 figure has exceeded KRW 3 trillion since KRW 3.3312 trillion in 2017.

The most notable feature of this year's cosmetics industry M&A is the shift in focus from brands to a broader scope encompassing packaging materials, special ingredients, beauty medical devices, and ODM. Analysts note a significant move beyond merely acquiring popular brands to securing the foundational strength of the K-beauty ecosystem, including manufacturing, packaging, and technology.

The largest deal this year was the acquisition of Samhwa by global private equity firm Kohlberg Kravis Roberts (KKR) for KRW 733 billion, setting a record high for a single item (packaging). Founded 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 investment trend combining brands and distribution platforms. 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 acquiring representative K-beauty indie brands such as 'Joseon Beauty' and 'TIRTIR.' The overseas sales ratio 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 high sales ranking in the skincare category on Amazon in the United States.

Large transactions continued in the beauty medical device sector. VIG Partners acquired Viol, which owns RF-based lifting devices 'Celineu,' 'Scarlet,' and 'Silfirm X,' for KRW 521.3 billion. Viol is recognized for its technological value amid the expansion of beauty medical device exports and is one of the widely used beauty medical device brands in domestic and international clinics.

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 ODM field of 'point makeup' 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 from the same period last year. The number of export destinations has expanded to 176 countries. As the favorable export trend of K-beauty continues, 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 chain, including ODM, packaging, and distribution, is rising together."

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