Johnson & Johnson acquires Elsker for 650 mln yuan

Source: Morning Whistle by Kang Xiaoxiao

It was reported that Johnson & Johnson has wholly purchased Shanghai-based Elsker. Their contract was submitted to the China Commerce Department for approval on Dec. 1.

Elsker, founded in 2006 with 5 million yuan in registered capital, is a mommy and baby supply manufacturer with products including body wash, shampoo andtalcum powder.

In 2007, Elsker received an angel investment of 20 million yuan and then was granted 5.5 million euro of funding from Rothschild’s private equity fund twice, in 2009 and 2010.

After deficits in the earliest years, Elsker earned 300 million yuan in 2011, realizing aprofit and balance loss for the first time. According to Cao Jingchun, sales director of Elsker (Children), the Elsker sales has significantly increased, by 70 percent year-on-year, in 2012 to about 500 million yuan, realizing profitability.

The rapid development of Elsker was believed to be threatening the leading position of Johnson & Johnson in the baby supplies market. So the acquisition of Elsker removes a strong competitor of Johnson & Johnson, stabilizing its market share in baby supplies.

It was reported that the original CEO of Elsker, Liu Xiaokun would leave with his core management team after the acquisition to create a new men’s skincare brand.

However, the post-acquisition future of Elsker causes worryamong insiders as anther Chinese cosmetics brand Mininurse has disappeared from the market for a while after being bought by L’Oreal, which has been denied by some other experts as well.

“Johnson & Johnson acquired Chinese cosmetic brand Dabao in 2008, which is operated quite well at present, which provides experiencefor Johnson & Johnson to deal with the integration problem with a Chinese local brand,” said Xia Tian, an investor in the daily use chemical sector.