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L'Oreal to buy Newport Beach-based makeup brand Urban Decay

November 26, 2012|By Shan Li
  • Urban Decay is being purchased by makeup giant L'Oreal.
Urban Decay is being purchased by makeup giant L'Oreal. (Debs via Flickr )

L'Oreal is buying edgy makeup brand Urban Decay as the cosmetics giant seeks to reach more younger customers.

The French company agreed to buy the Newport Beach firm for an undisclosed amount from private equity firm Castanea Partners.

Castanea, which bought Urban Decay in 2009, said the makeup firm has since more than tripled its revenue and raked in $140 million in sales in the past year.

"Urban Decay will beautifully complement L'Oreal's luxe portfolio of iconic brands," Nicolas Hieronimus, president of L'Oreal Luxe, said in a statement. He described Urban Decay as "the makeup specialist we need to fully satisfy young women in search of playful colors ... at an accessible price point."

Founded in 1996, Urban Decay is known for its bright color palettes and outspoken refusal to test products on animals. It's part of a specialty cosmetics market that accounts for about 44% of the luxury beauty market in the U.S., L'Oreal said.

Pablo Zuanic, an analyst at Liberum Capital, estimates that L'Oreal is paying $250 million to $300 million for the Southern California company.

"Urban Decay is exactly the type of brand L'Oreal needs to beef up its makeup portfolio," he wrote in a note to clients.

The deal awaits regulatory approval, which is expected before the end of December.

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Follow Shan Li on Twitter @ShanLi

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