L’Occitane International SA, a prominent skincare specialist, experienced a significant decline of almost 30% in its share price on Tuesday. This drop followed the announcement by the chairman and controlling shareholder, Reinold Geiger, that he had decided against taking the company private. The decision effectively terminates any speculation regarding a potential European listing for L’Occitane.

As a result of this news, the stock price of L’Occitane-en-Provence plummeted to HK$19.70 during early trading. Geiger’s investment holding company, L’Occitane Groupe SA, had previously proposed a take-private offer with a minimum value of HK$26.00 per share. Moreover, the market capitalization of L’Occitane diminished significantly, falling from HK$40.9 billion to HK$29 billion based on the stock’s last closing price on Friday.

Sources have revealed that Geiger had been discussing with advisers the possibility of relisting L’Occitane on a European exchange as early as next year. Currently, L’Occitane Groupe SA owns 72.5% of the skincare firm. L’Occitane initially made its debut on the Hong Kong stock exchange in 2010, distinguishing itself as one of the first Western companies to sell its primary shares in this Asian financial hub, aiming to expand its reach into the rapidly growing Chinese market.

Under Geiger’s leadership, L’Occitane has experienced remarkable growth over the past decade, doubling its sales and extending its retail presence to 3,000 outlets across 90 countries. The company specializes in offering organic beauty products. Nevertheless, L’Occitane’s forward price to earnings ratio still falls behind that of its cosmetic sector counterparts, including French firm L’Oreal SA.

The decision to abandon the take-private deal undeniably impacted L’Occitane’s stock performance, with investors reacting negatively to the news. Although the company has achieved significant success under Geiger’s guidance, the extent to which this setback will influence L’Occitane’s future plans for growth and expansion remains uncertain. Investors will undoubtedly monitor the company closely to assess its next moves.

Useful links:
1. L’Occitane official website
2. L’Oreal SA official website