Bare Escentuals purchase may portend something bigger

Acquisition by Shiseido could mean the Japanese are gearing up for more.

By Jim Cramer Jan 15, 2010 8:44AM
TheStreetWoman with lipstick  © Stockbyte/PictureQuest By Jim Cramer, TheStreet

  

There are these companies, you see them, you hit them up, they are unsponsored, unloved, uncared about, after coming public in another time with a huge splash. Companies like Bare Escentuals (BARE).

 

Here's a red-hot Goldman Sachs deal from four years ago that literally hit a revenue and earnings-per-share wall not long after coming public that made it a pretty scorned affair.

 

I remember thinking, "Ha, mineral-based cosmetics, that fooled a lot of people when it reported its first really flat quarter. Probably another Revlon (REV)."


For a while there, Bare Escentuals would be asked about on "Mad Money's" Lightning Round, because, well, the stuff is everywhere in the mall. But then it just kind of died, a stock that doesn't get mentioned about much, if at all anymore.

 

Boom.

 

Shiseido, the huge Japanese cosmetics company, pulled the trigger on Bare Escentuals, paying about 50% more than what you owned Thursday. Shiseido is paying $1.7 billion, or $18.20 a share, a premium of 43% over Bare Escentuals' close Thursday of $12.74. The acquisition moves Shiseido from No. 6 to the No. 4 cosmetics company.

 

Find a new broker and start trading

 

More important, this acquisition is what happens to stocks that are forgotten about that still have great brands but subpar growth: Someone finds them.

 

In this case, the finder, a Japanese company, might be one-off. But think of the possibilities. There are so many Japanese companies that have little growth and great balance sheets. In the late 1980s they came here and bought a ton of companies because their own markets were on fire.

 

Then they just went away.

 

One deal does not a trend make. But I think the Japanese have always had a groupthink philosophy. I do not believe this is out of the blue.

 

It is a meaningfully paid-up transaction that could signify something bigger, and not just to the people who were unlucky enough to own BARE for the last three years ... until this morning.

 

Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO.

 

Related Articles

 

Five dumbest things on Wall Street: Jan. 15

 

Hershey sizing up Kraft's next move

 

Electric cars that speed ahead of gas guzzlers

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
262
262 rated 2
480
480 rated 3
651
651 rated 4
649
649 rated 5
629
629 rated 6
616
616 rated 7
496
496 rated 8
346
346 rated 9
111
111 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
EXCEXELON CORPORATION9
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.