The size and number of mergers and acquisitions (M&A) in K-beauty last year were recorded at all-time highs. As cosmetics exports hit a record high and related share prices strengthened, K-beauty companies are emerging as “blue chips” in domestic and overseas capital markets. The scope of acquisitions is expanding beyond cosmetics brands to include original design manufacturing (ODM), packaging, and beauty devices.

● Record-high number and size of K-beauty M&As

According to cosmetics industry M&A research by MMP, an SME-focused M&A advisory firm, there were 29 M&A deals involving domestic cosmetics companies last year, with a combined value of KRW 3,593.4 billion. This surpassed the previous high of KRW 3,313.2 billion in 2017, when Unilever’s approximately KRW 3 trillion acquisition of Carver Korea led to an exceptionally large transaction volume. It is also notable that the number of M&A deals targeting small and medium-sized enterprises has risen sharply, as even smaller beauty brands gain popularity in global markets.

According to the Ministry of SMEs and Startups, exports of cosmetics by domestic SMEs reached USD 8.32 billion last year, the highest level on record. The number of SME exporters in K-beauty also exceeded 10,000 for the first time last year, up from 8,041 in 2022. Exports in the first quarter of this year (January to March) amounted to USD 2.18 billion, the largest ever for a first quarter.

The rise in share prices of K-beauty companies, driven by robust exports, is cited as another factor pushing up their valuations in the M&A market. APR’s share price closed at KRW 424,500 on 30 April, up 82% from KRW 233,000 at the beginning of the year. Among ODM companies, Korea Kolmar’s share price rose from KRW 65,400 to KRW 88,700, and Cosmax’s from KRW 178,000 to KRW 210,500 over the same period, increases of 35% and 18%, respectively.

● From brands to cosmetics packaging

As K-beauty attracts attention in global markets, major investors that are actively acquiring domestic beauty companies are coming to the fore. Gudae Global, a Korean cosmetics company that owns the “Beauty of Joseon” brand, acquired “TIRTIR” and “SKIN1004” in 2024, followed by “Skinfood” and “Round Lab” last year. As a result, it expanded its scale, recording sales of KRW 1,470 billion last year. In March this year, it further broadened its business scope by acquiring Han Sung USA, a U.S. cosmetics distributor.

Private equity fund (PEF) manager VIG Partners has successively acquired “Yvoire,” the aesthetic filler brand of LG Chem’s aesthetics business unit, as well as aesthetic medical device companies Viol and Ultra V.

Global private equity funds are extending their investment scope beyond individual brands to encompass the entire K-beauty value chain, including cosmetics production and packaging. Last year alone, there were five M&A deals in the cosmetics ODM sector. A representative case is private equity manager Ascent Equity Partners’ acquisition of C&C International, the fourth-largest ODM player in Korea, for KRW 285 billion. In the packaging segment, Samhwa, the country’s leading company, was sold to KKR (Kohlberg Kravis Roberts) for KRW 733 billion, followed by the sale of Changsin, a packaging manufacturer with a 37-year history, to Arc & Partners for KRW 180 billion.

The heated K-beauty M&A market is expected to continue this year. In the first quarter alone (January to March), five deals were completed. In its report “K-Beauty, the Rising Player Leading Global Beauty Trends” published in December last year, the Samjong KPMG Economic Research Institute stated, “As more K-beauty brands grow into mega brands with sales exceeding KRW 100 billion in a short period of time, investor participation in acquisitions has increased,” adding, “The ability to enter global markets and achieve rapid monetization through differentiated concepts and brand value is enhancing investment appeal.”

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