L'Occitane International SA 00973

L'Occitane: Buyout Offer Undervalues Growth Potential and Margin Upside

While Reinold Geiger's HKD 34 per share offer presents a potential exit opportunity for L'Occitane investors, we believe it falls short of reflecting the company's intrinsic value. For the proposal to be more compelling, we would prefer to see the offer priced at a premium to our fair value estimate of HKD 37 per share. We believe management's offer price overlooks L'Occitane's long-term prospects, undervaluing it by about 8%. We argue that pursuing L’Occitane’s medium-term objectives would better serve shareholder interests. These objectives include the global expansion of its Elemis, Sol de Janeiro, and Grown Alchemist brands, alongside an initiative aimed at improving profit margins. There are no competing bids for L’Occitane, and we do not foresee any regulatory obstacles that could derail these plans.