Shiseido Co. announced Friday that the company will acquire Bare Escentuals Inc. (NASDAQ: BARE) in a $1.7 billion deal, according to Associated Press.
The acquisition is Shiseido's biggest purchase in the company’s history, which was founded in 1872.
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The company will offer to buy all outstanding stock of Bare Escentuals for $18.20 a share, which represents a 43 percent premium over its closing price on the Nasdaq Thursday. The transaction was unanimously approved by both boards of directors.
Bare Escentuals will operate as a separate division of Shiseido under current chief executive Leslie Blodgett. With 85 percent of revenue generated in the U.S., Bare Escentuals can utilize Shiseido to broaden its horizons overseas.
Shiseido is Japan's biggest cosmetics company with operations in more than 70 countries, but global business accounted for just 38 percent of the company's $7.5 billion in sales last fiscal year. Its presence in the U.S. remains limited, making up 8 percent of total revenue.
Shiseido aims to boost overseas sales to 50 percent of overall revenue by 2017. After the deal, the company estimates that figure will rise to 42 percent. Moreover, it says it believes in Bare Escentuals' global growth potential as increasing numbers of women turn to cosmetics with more natural ingredients.
Blodgett, who owns six percent of Bare Escentuals, will maintain a smaller stake in the company after selling 40 percent of her holdings to Shiseido. Its top shareholder, Berkshire Partners LLC, has agreed to sell its 16 percent stake to Shiseido.
Bare Escentuals will be delisted from the Nasdaq after the acquisition.
Shiseido jumped 5.1 percent to 2,040 yen on the Tokyo Stock Exchange, beating the Nikkei 225 index's 0.7 percent rise.
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