Bare Escentuals Rises 40 Percent on Buy Out
January 15, 2010
Shares in Bare Escentuals Inc. (BARE), which we picked up for our model Beacon Master Portfolio in October, were up more than 40 percent in morning trading on news that Japanese cosmetics giant Shiseido is acquiring the company for $1.7 billion. The all cash offer values the company at $18.20 per share, a 40 percent premium over Thursday's closing price of $12.74. Shares were trading at a range between $18.08 and $18.13, on heavy volume.
We picked up shares for the model portfolio in mid-October at $13.12. The buy out will give our position in the model portfolio a profit of more than 38 percent.
Our purchase for the model portfolio was based primarily on demographics, as we believe the potential U.S. customer base for cosmetics is about to experience significant expansion as female members of the second–and larger–half of Generation X (those born 1975 to 1984) is entering the peak spending years or cosmetics, perfume and bath products. This expanding U.S. customer base is being significantly enhanced the rising population of U.S.
Hispanic women, who on average spend 28 percent more on cosmetics, perfumes and bath products than other customers. Furthermore, Gen. X females will be followed those from the even larger Gen. Y (born 1985 to 200), which should give the entire female beauty care sector a boost for at least the next 15 years (this following a 15-year general decline caused in large part by declining births from 1962 to 1974).
