Japan Cosmetics OEM M&A: Consolidation of Contract Manufacturers, Plant Sales by Brand Owners and Foreign Capital

(Updated October 2026. USD figures are converted at USD/JPY = 150 for reference.)

In Japanese cosmetics, OEMs manufacture products for brand owners, and ODMs also take on formulation and product development; this article refers to both as contract manufacturers. Japanese contract manufacturers have been consolidating. In 2024, Nihon Kolmar Holdings, the holding company of TOA, acquired Tokiwa from funds managed by Carlyle and other shareholders. In 2026, the listed OEM Nippon Shikizai completed the purchase of a plant from the brand owner Haba Laboratories. A contract manufacturer carved out of a Japanese packaging group was acquired by the Japanese subsidiary of a UK-listed consumer brands company. Abroad, Japanese OEMs, trading houses and packaging companies have acquired contract manufacturers and production sites in the United States, Europe, China and Southeast Asia.

This article is written for corporate development and international business development teams at foreign companies that see Japan as an acquisition market, a source of partners, or a source of acquirers for their own businesses. It reviews Japan cosmetics OEM M&A through the market structure, the industry landscape, domestic consolidation, foreign companies’ transactions and alliances in Japan (Out-In), Japanese companies’ acquisitions of contract manufacturers abroad (In-Out), the industry-specific factors acquirers examine, and the implications for overseas acquirers.

1. Market Structure — Domestic Shipments Below Pre-Pandemic Levels and Shifts in Trade

Market size

According to the Japan Cosmetic Industry Association (JCIA), which compiles data from the Ministry of Economy, Trade and Industry (METI) Current Production Statistics, domestic shipments of cosmetics in 2025 were ¥1,390.7bn (~USD 9.3bn), up 1.2% year on year and the third consecutive annual increase (JCIA, Cosmetics Shipments). JCIA also reports that average unit prices rose in each year from 2023 to 2025. At the same time, the interim report of METI’s study group on the competitiveness of the cosmetics industry (June 2026), drawing on the same production statistics, states that domestic shipments in 2024 were about ¥1.4tn, below the roughly ¥1.8tn recorded before the COVID-19 pandemic (METI, Interim Report of the Study Group on Strengthening the Competitiveness of the Cosmetics Industry, in Japanese).

On trade, Ministry of Finance statistics show that exports peaked at ¥790.6bn (~USD 5.3bn) in 2021, declined until 2024 and increased again in 2025. Since 2020, China has accounted for about half of exports, and exports to China in 2025 were ¥283.6bn (~USD 1.9bn). Imports have risen steadily. South Korea became the largest source of imports in 2022 and has held that position since, with imports from Korea reaching ¥141.8bn (~USD 945mn) in 2025 (JCIA, Cosmetics Exports and Imports).

Regulatory position of contract manufacturers

Under Japan’s Pharmaceuticals and Medical Devices Act, the company that places a cosmetic product on the market must hold a marketing authorization license; in most cases, this is the brand owner. Manufacturing is carried out by companies holding a manufacturing license. Products regulated under the act also include quasi-drugs, a category between pharmaceuticals and cosmetics, such as medicated skin care products. Manufacturing licenses are granted for each manufacturing site, in two categories: all or part of the manufacturing process, and packaging, labeling and storage only. As of March 31, 2025, there were 4,432 marketing authorization licenses and 4,398 manufacturing licenses for cosmetics, both on a rising trend (JCIA, Number of Cosmetics Licenses by Prefecture, based on Ministry of Health, Labour and Welfare data). The manufacturing figure counts sites, not companies.

METI’s interim report describes the Japanese industry as built on a vertically integrated model, in which large and mid-size brand owners handle planning, development, manufacturing and sales in-house, and contrasts it with South Korea, where large ODMs (contract manufacturers that also design and develop products) are at the core of development and production. The report notes signs of change in Japan, including the entry of fabless start-ups that outsource manufacturing, and identifies hybrid production, combining in-house manufacturing with external ODMs, as a direction for the industry.

Product categories

Formulations, manufacturing equipment and the development work customers expect differ by product category. In M&A, the categories a contract manufacturer can produce shape both the set of likely acquirers and the way they assess the business.

Category	Share of shipments (2025)	Main products	Characteristics in contract manufacturing
Skin care	45.2%	Lotions, emulsions, serums, creams, cleansers	Preparation and filling of liquids and emulsions. In 2025, serums (¥121.9bn) overtook lotions as the largest single item by shipments
Hair care	26.9%	Shampoos, treatments, styling products	Preparation and filling of liquids. For large-volume products, mixing vessel and filling line capacity determine supply
Makeup	20.2%	Foundations, lipsticks, eye makeup	Molding of powders and oil-based solids, and color adjustment. Molding and filling equipment differ by product format
Special purpose	7.0%	Sunscreens and others	—
Fragrance	0.7%	Perfumes and colognes	—

Shares are from JCIA.

Four drivers of consolidation

Domestic shipments below pre-pandemic levels and competition from imports — Domestic shipments have grown since 2023, but METI’s interim report states that they remain below pre-pandemic levels. Exports depend heavily on China, and Korea has been the largest source of imports since 2022. Against this background, a contract manufacturer has acquired a domestic peer, citing manufacturing needs from overseas brand owners as one of its purposes (Case 3).
Brand owners reviewing their production — In 2017, Kose agreed to transfer its Chinese production subsidiary to Nihon Kolmar Holdings and to continue sourcing its local brand products from the Nihon Kolmar group; the transfer was completed during FY2019/3 (Case 7). In 2026, Nippon Shikizai completed the purchase of Haba Laboratories’ Komoro plant (Case 2). METI’s interim report also identifies cooperation with external ODMs as a direction for the industry. When brand owners release production sites, those plants and production subsidiaries become acquisition targets for contract manufacturers.
Securing production capacity — TOA started operations at its new Yuki plant in March 2025, bringing its domestic plants to eight. Nippon Shikizai stated that it had been seeking opportunities to expand capacity through M&A or plant purchases before buying the Komoro plant. Bay Cosmetics acquired a filling and packaging specialist to bring its group to seven filling lines (Case 3). Alongside new construction, acquisitions of other companies and their plants have become a means of securing capacity.
Private equity involvement — Carlyle formed a capital alliance with Tokiwa in 2019, and about five years later, in 2024, its funds and other shareholders sold all shares of Tokiwa’s parent company to Nihon Kolmar Holdings (Case 1). In this case, a private equity fund was first an investor in a non-listed contract manufacturer and later the seller in its sale to a domestic peer. For owners, a private equity investment is one option for bringing in capital before a sale to a strategic buyer.

2. Industry Landscape

Large contract manufacturers

Company	Headquarters	Employees	Ownership and recent moves
TOA (formerly Nihon Kolmar)	Chuo-ku, Osaka	2,448 (March 2026)	Wholly owned by Nihon Kolmar Holdings. Renamed from Nihon Kolmar in June 2024. Eight domestic plants after the Yuki plant started operations in March 2025
Tokiwa	Nakatsugawa, Gifu (registered office)	1,017 (March 2026)	Carlyle was an investor from 2019 to 2024. Part of the Nihon Kolmar Holdings group since July 2024
Toyo Beauty	Chuo-ku, Osaka	921 (December 2025)	Founded in 1941. Plants in Mie, Tochigi and Saga

Employee figures are as of the dates in each company’s profile. TOA’s non-consolidated revenue for FY2026/3 was ¥69.6bn (~USD 464mn). The company was founded in Osaka in 1912 as a cosmetics maker, lost its plant in World War II, and restarted as a specialist contract manufacturer after the war. It entered into an alliance with Kolmar Laboratories of the United States in 1968 and took the name Nihon Kolmar in 1972 (Case 6). According to its corporate history, it established a joint venture in South Korea in 1990, a company in Suzhou, China in 1997, and companies in Hangzhou, China and in Vietnam in 2018. Tokiwa and Toyo Beauty do not disclose revenue.

Listed contract manufacturers

Company	Headquarters	Consolidated revenue	Main fields and recent moves
Nippon Shikizai	Minato-ku, Tokyo	¥16.6bn (~USD 111mn), FY2026/2	Founded in 1930. Listed on TSE Standard. Two subsidiaries in France. Acquired Haba Laboratories’ Komoro plant in March 2026

Among the contract manufacturers covered in this article, Nippon Shikizai is the one listed on the Tokyo Stock Exchange. Its consolidated revenue for FY2026/2 fell 5.6% year on year, and its operating profit was ¥180mn (~USD 1.2mn).

Contract manufacturers within corporate groups

Several contract manufacturers belong to larger corporate groups. Air Water Realize, a group company of industrial gas supplier Air Water, manufactures aerosol products and cosmetics on contract; it was renamed from Air Water Sol in April 2023, and in February 2024 it acquired the consumer cosmetics business of Nanoegg. Cosmetec Japan (headquarters in Osaka, plant in Okayama) is a group company of Momotani Juntenkan, and its company profile states group revenue of ¥18.2bn (~USD 121mn). Bay Cosmetics (Izumisano, Osaka) was established in December 2023 as a wholly owned subsidiary of MD Co., Ltd., a marketing consultancy. Cosme Science (Kita-ku, Tokyo) joined the group of packaging company Hokkan Holdings in 2013 and was sold in 2024 to the Japanese subsidiary of UK-listed Silverwood Brands (Case 4).

Non-listed manufacturers and process specialists

Most non-listed contract manufacturers do not disclose their shareholders, and owner-run companies cannot be identified from public information alone. The 4,398 cosmetics manufacturing licenses are counted by site and include sites licensed only for packaging, labeling and storage. Sanpack (Kishiwada, Osaka), acquired in Case 3, specialized in filling and packaging for cosmetics and quasi-drugs, and served both brand owners and OEM companies. Businesses that perform specific processes for contract manufacturers have also become acquisition targets. Identifying such companies requires research beyond public databases.

Concentration in Kansai

As of March 31, 2025, Osaka Prefecture had 703 cosmetics manufacturing licenses, second only to Tokyo (766). The six prefectures of the Kansai region (Osaka, Hyogo, Kyoto, Nara, Wakayama and Shiga) together had 1,116, about 25% of the national total. Of the companies covered in this article, Nihon Kolmar Holdings and TOA, Toyo Beauty, Cosmetec Japan, Bay Cosmetics and Sanpack are headquartered in Osaka Prefecture, and TOA operates its Yao and Kashiwara plants there.

3. Domestic Consolidation — A Private Equity Exit, a Plant Purchase and a Process Specialist

Case 1: Carlyle, Nihon Kolmar Holdings and Tokiwa (2019 and 2024) — A full acquisition by a domestic peer after a private equity investment

Tokiwa (registered office in Nakatsugawa, Gifu; established 1948) develops and manufactures cosmetics, with a focus on makeup, and has subsidiaries in the United States, China (Kunshan) and the Philippines. In March 2019, US-based investment firm The Carlyle Group agreed to a strategic business and capital alliance with Tokiwa, funded by Carlyle Japan Partners III, its yen-denominated buyout fund for Japan. The stake and the method of investment were not disclosed. Carlyle stated that it would support management’s execution of the business while strengthening Tokiwa’s marketing capabilities and building a management base for overseas expansion.

In June 2024, Nihon Kolmar Holdings, the holding company of TOA, agreed to acquire all shares of Tokiwa Cosmetics Group, the parent company of Tokiwa, from Carlyle funds and other shareholders through a share purchase. The price was not disclosed. Completion was subject to antitrust approvals, and Tokiwa joined the group in July 2024. Nihon Kolmar Holdings described the two companies as highly complementary and stated that the purpose was to build a production system competitive not only in Japan but in global markets. It described Tokiwa as holding more than 400 patents in Japan and abroad and as supplying well-known brands worldwide, particularly in makeup. TOA and Tokiwa continue to operate as separate companies, and in April 2025 they announced that they would work together as a group offering a full lineup of cosmetics OEM and ODM services.

These transactions show that (i) for a non-listed contract manufacturer, a private equity fund served first as an investor and, about five years later, as the seller to a domestic peer, (ii) the acquirer, the holding company of a contract manufacturer, cited the complementarity of the two companies and the build-out of production capabilities, including overseas, as its purpose, and (iii) the target was kept as a separate company within the group, with the group presenting the combined product range to customers.

Case 2: Nippon Shikizai and Haba Laboratories’ Komoro plant (2025–2026) — A contract manufacturer buys a brand owner’s plant as an asset

In December 2025, Nippon Shikizai resolved to acquire the land and buildings of the plant that Haba Laboratories owned in Komoro, Nagano, for about ¥650mn. The transaction was an asset purchase rather than a share acquisition. Nippon Shikizai took delivery on March 25, 2026, at a final price of ¥655mn (~USD 4.4mn), for 4,927.82 square meters of land and 1,424.30 square meters of buildings. The company stated that it had been seeking opportunities to expand production capacity through M&A or plant purchases. In its annual securities report filed in May 2026, it stated that the Komoro plant will serve as a filling and packaging site, with production lines to be started one at a time, targeting the start of operations in the second half of FY2027/2.

This transaction shows that (i) a contract manufacturer acquired a brand owner’s plant as land and buildings rather than as a company, and (ii) the purpose was to add filling and packaging capacity, with a phased start-up period required after the acquisition before production begins.

Case 3: Bay Cosmetics and Sanpack (2025) — Acquisition of a filling and packaging specialist

On September 30, 2025, Bay Cosmetics (Izumisano, Osaka) acquired all equity interests in Sanpack (Kishiwada, Osaka), a limited liability company specializing in the filling and packaging of cosmetics and quasi-drugs, making it a wholly owned subsidiary. Bay Cosmetics stated that the acquisition brought the group to seven filling lines with a capacity of 1.3 million units a month, and that investment in mixing vessels and automated filling lines would raise capacity to 2 million units a month by June 2026, or about 24 million units a year (plans as of the October 2025 announcement). It cited the strengthening of an integrated system covering planning, manufacturing, filling and packaging within the group, and meeting manufacturing needs from overseas brand owners. Sanpack’s existing customers included both cosmetics brand owners and OEM companies.

This transaction shows that (i) a contract manufacturer less than two years old secured capacity by acquiring a local process specialist, (ii) the target was a filling and packaging specialist that also performed processes for other OEM companies, and (iii) the transaction took the form of an acquisition of all equity interests in a limited liability company (godo kaisha).

4. Foreign Companies in Japanese Cosmetics Manufacturing — Out-In Transactions and Alliances

Out-In refers to transactions in which foreign companies acquire, invest in or partner with Japanese businesses; In-Out refers to Japanese companies’ transactions abroad. The cases below and Case 1 show four routes that foreign companies have used to gain cosmetics manufacturing capabilities or relationships in Japan: acquiring a business released by a Japanese corporate group (Case 4), partnering with a Japanese trading house (Case 5), forming an alliance with a Japanese manufacturer (Case 6), and investing through a Japan buyout fund (Case 1).

Case 4: Sonotas (Silverwood Brands) and Cosme Science (2024) — A foreign consumer company acquires a carve-out from a packaging group

Cosme Science (Kita-ku, Tokyo; established 1984) develops and manufactures cosmetics on contract, and owns Dr. Baeltz Co., Ltd., a subsidiary that markets the Dr. Baeltz skin care brand for sensitive skin. Hokkai Can, a subsidiary of packaging company Hokkan Holdings, acquired Cosme Science in 2013 and held all of its shares at the time of the sale. In March 2024, Hokkan Holdings decided to have Hokkai Can sell all of its shares in Cosme Science. It explained that, while reviewing its business portfolio under the “restructuring of domestic businesses” in its medium-term plan, it had received an approach from Sonotas, a company with strengths in cosmetics marketing, and had concluded that it would be preferable for Sonotas to pursue a growth strategy with management control. The sale closed on March 29, 2024.

Sonotas (Minato-ku, Tokyo), the owner of brands such as the moisturizer STEAMCREAM, is the Japanese subsidiary of Silverwood Brands, a holding company listed on the Aquis Growth Market in the UK that invests in consumer brand businesses. According to Silverwood Brands’ disclosure, the consideration was a nominal ¥1 for the shares of Cosme Science and Dr. Baeltz, plus ¥1,000mn (~USD 6.7mn) to acquire debt owed by Cosme Science to Hokkan Holdings, funded by debt finance in Japan. For FY2023/3, Cosme Science and Dr. Baeltz reported combined sales of ¥1,608mn (~USD 10.7mn) and EBITDA of ¥123mn (~USD 0.8mn). Silverwood Brands described the deal as a significant step that would enhance its research and development and manufacturing capabilities in the Japanese market, and expected further market expansion for the Dr. Baeltz brand.

This transaction shows that (i) a Japanese packaging group released a contract manufacturer that had become non-core, and a foreign consumer company acquired it through its Japanese subsidiary, (ii) the buyer initiated the approach and sought manufacturing capability for its own brands, and (iii) the consideration combined a nominal price for the shares with the purchase of debt owed to the former parent group (Hokkan Holdings). The total of ¥1,000mn for the shares and the debt was about 8 times the combined EBITDA for FY2023/3 (our calculation: consideration including the debt purchase divided by EBITDA; not on the same basis as the multiples in Case 10).

Case 5: Intercos with Sumitomo Corporation (2018) — A foreign ODM announces entry into Japan with a trading house

In February 2018, Sumitomo Corporation, its subsidiary Sumisho Pharma International and Intercos, an Italian cosmetics ODM founded in 1972, announced that they would enter the cosmetics ODM business in Japan. At the time, Intercos served about 430 customers, with strengths in makeup and skin care, and operated 11 research sites and 15 production sites, mainly in Europe, the Americas, China and Korea. The partners stated at announcement that they planned to set up an operating company and a research facility jointly within the fiscal year, targeting Japanese cosmetics brand owners. The announcement cited the expected trend among Japanese brand owners to outsource cosmetics production as their overseas businesses expanded, product development accelerated and new entrants arrived from other industries. In an article published in 2024, Sumitomo Corporation described the arrangement as a business alliance with Intercos; whether the planned joint operating company was established is not stated in the company’s public materials we reviewed.

This case shows that (i) a foreign ODM approached the Japanese market through a partnership with a Japanese trading house that already supplied cosmetics ingredients to brand owners, and (ii) the partners based the entry on an expected increase in outsourcing by Japanese brand owners, the same direction that METI’s interim report later identified.

Case 6: Kolmar Laboratories and Nihon Kolmar (1968) — An early alliance with a US contract manufacturer

In 1968, the company now known as TOA, then a contract manufacturer in Osaka, entered into an alliance agreement with Kolmar Laboratories of the United States, and renamed itself Nihon Kolmar in 1972. According to TOA, by the late 1980s it had grown to a revenue scale of about ¥10bn, comparable to Kolmar Laboratories, and it then ended the technology tie-up. The company kept the Kolmar name until it adopted the name TOA in June 2024. In 1990, it established a joint venture in South Korea.

This case is an alliance rather than an equity investment. It shows that (i) relationships between Japanese and foreign contract manufacturers in this industry date back more than 50 years, and (ii) the Japanese partner ended the technology tie-up as its own business grew, and has since acquired businesses in Japan and abroad (Cases 1 and 7).

Cases 1 and 4 also involve foreign capital. In Case 1, the investor was a US-based investment firm acting through its Japan buyout fund; in Case 4, the buyer was a UK-listed consumer company acting through its Japanese subsidiary. In both, the foreign party worked through a Japan-based vehicle with local management.

5. Japanese Cosmetics Manufacturers and Groups Abroad — In-Out Transactions

For overseas companies, Japanese contract manufacturers, trading houses and packaging companies are potential acquirers of their businesses and potential partners. Their transactions show what they buy, on what grounds and, where disclosed, at what price.

Case 7: Nihon Kolmar Holdings and Kose’s Chinese production subsidiary (2017–2019) — A contract manufacturer acquires a brand owner’s overseas plant

In October 2017, Kose agreed to transfer all equity interests in its production subsidiary in Hangzhou, China (高絲化粧品有限公司, established 1988), to Nihon Kolmar Holdings. Kose explained that it had concluded that concentrating resources on its sales business was the best option, and stated that after the transfer it would receive production supply of its local brand products from the Nihon Kolmar group and continue selling through its own sales subsidiary in China. The price was not disclosed. The transfer was completed during FY2019/3, and Kose recorded a gain on sale of ¥925mn (~USD 6.2mn).

This transaction shows that (i) a brand owner transferred an overseas production subsidiary to a contract manufacturer while continuing to source products from the buyer’s group, and (ii) the contract manufacturer obtained the production site together with supply business from the seller.

Case 8: Nippon Shikizai, Thepenier and Orleans Cosmetics (2000 and 2017) — Step-by-step acquisitions of French contract manufacturers

In February 2000, Nippon Shikizai acquired shares of Thepenier, a French contract manufacturer of pharmaceuticals and cosmetics, citing the expansion of overseas sales and stronger competitiveness. In January 2017, through Thepenier, it acquired 80% of the voting rights of Orleans Cosmetics, another French cosmetics manufacturer, for about EUR 1.2mn (the yen amount was not disclosed), citing the expansion of its product range, increased production capacity and stronger research and development. Sales of Nippon Shikizai’s France segment for FY2026/2 were ¥5.04bn (~USD 34mn).

These transactions show that (i) a Japanese contract manufacturer acquired European contract manufacturers and built a system for producing in both Japan and France, and (ii) the second acquisition was a majority stake taken through an existing overseas subsidiary.

Case 9: Mitsui & Co. and Dermaceutical Laboratories (2023) — A trading house acquires a US contract manufacturer

In August 2023, Mitsui & Co. announced an agreement to acquire all shares of Dermaceutical Laboratories (D-LAB) of New Jersey, established in 2001 with 84 employees. D-LAB develops and manufactures skin care, color cosmetics and over-the-counter products as an ODM for US and global brand owners. Mitsui cited the expected growth of the US skin care market and rising demand for ODMs, including from emerging brands, supported by the purchasing power of millennials and Generation Z. It positioned D-LAB as the core of its beauty and personal care business in the Americas, and stated that it would introduce Japanese concepts, functional ingredients and new technologies, together with its ingredient sourcing capabilities. The price was not disclosed.

This transaction shows that (i) a trading house with ingredient sourcing capabilities acquired a contract manufacturer and planned to use it to offer its own ingredients and Japanese technologies, and (ii) the stated reason was a change on the customer side, namely rising demand for ODMs, including from emerging brands.

Case 10: Toyo Seikan Group Holdings and Premier Centre Group (2024) — A packaging company acquires a Malaysian contract filler

In February 2024, Toyo Seikan Group Holdings agreed to acquire all shares of Premier Centre Group (established 1972), a Malaysian contract filler (OEM and ODM) of home care and personal care products, for USD 75mn (¥11.07bn at the disclosed rate, subject to price adjustment), and completed the acquisition in August 2024. The seller was a Malaysian holding company. For FY2022/12, the target reported revenue of MYR 324.7mn (about ¥10.1bn) and operating profit of MYR 38.1mn (about ¥1.19bn). Toyo Seikan cited the expansion of its filling business in Asia, market growth supported by Malaysia’s growing population, and the combination of its own container manufacturing and development technology with the target’s formulation and filling technology.

This transaction shows that (i) a packaging company acquired a contract filler, the next step after the container in its customers’ supply chain, and (ii) the price was about 1.1 times revenue and about 9.3 times operating profit for FY2022/12 (our calculation: share purchase price divided by each figure; net debt is not included, so these are not enterprise value multiples). While Hokkan Holdings sold a domestic contract manufacturer in Case 4, this case shows another Japanese packaging company acquiring a contract filler abroad.

6. Industry-Specific Factors Examined by Acquirers

In acquisitions of Japanese cosmetics contract manufacturers, acquirers examine industry-specific factors in addition to financials. Based on the reasons and plans disclosed by the parties in the cases above, together with regulatory requirements, these factors fall into three groups.

Products and formulation technology — Which product categories (skin care, hair care, makeup and others) the company can produce, and which formulation and processing technologies it holds. The acquirer in Case 1 cited the complementarity of the two companies and described the target’s patents and its supply record in makeup. The acquirer in Case 8 cited the expansion of its product range, and the acquirer in Case 10 cited formulation and filling technology.
Customers and supply relationships — Customer mix, and whether supply relationships continue after a transaction. In Case 7, the seller continued to source from the buyer’s group after the sale. The target in Case 3 served both brand owners and OEM companies, the acquirer in Case 9 cited demand from emerging brands, and the target in Case 4 also owned its own brand.
Production and licenses — Plant and line capacity and location, manufacturing licenses held for each site, and compliance with regulation in export markets. In Case 2, the plant’s land and buildings were the object of the acquisition; in Case 3, filling line capacity was. The acquirer in Case 8 built a system for producing in Japan and France. On regulation, the US Modernization of Cosmetics Regulation Act of 2022 (MoCRA) requires facilities that manufacture or process cosmetics for distribution in the United States, including facilities outside the country, to register with the Food and Drug Administration (FDA). Registration and filing under China’s Regulations on the Supervision and Administration of Cosmetics (in force since January 2021) and under the EU Cosmetics Regulation rest mainly with the brand side, but for a site producing for the US market, facility registration is a precondition for doing business with customers.

7. Implications for Overseas Acquirers

Target universe

In Japan cosmetics OEM M&A, the targets in these cases fall into three groups: non-listed contract manufacturers with private equity or other shareholders (Case 1), contract manufacturers and plants held within corporate groups, including brand owners and packaging groups (Cases 2, 4 and 7), and process specialists (Case 3). Most non-listed manufacturers do not disclose their shareholders, and manufacturing licenses are counted by site, so public data alone does not identify the owners behind the 4,398 licensed sites. Identifying targets requires research beyond public databases, and approaching them requires direct contact with owners and parent companies, in Japanese.

Transaction structures

The cases show several structures: full share acquisitions from a private equity fund (Case 1), asset purchases of a plant’s land and buildings (Case 2), acquisitions of all equity interests in a limited liability company (Case 3), a nominal price for shares combined with the purchase of debt owed to the former parent group (Case 4), majority stakes taken through an existing subsidiary (Case 8), and transfers that keep a supply relationship with the seller (Case 7). Because manufacturing licenses are granted to the operator of each site, a share acquisition leaves the license holder unchanged while an asset purchase changes the operator of the site, so the handling of licenses and of the customer relationships attached to a plant differs by structure. The appropriate structure depends on the intentions of the owner or parent company and on the acquirer’s plans for the business.

What sellers emphasize

The corporate sellers in these cases explained their decisions in terms of the business’s future under a new owner and the continuity of supply. Hokkan Holdings concluded that it would be preferable for the buyer to pursue a growth strategy with management control (Case 4), and Kose chose to concentrate on sales while continuing to source its local brand products from the buyer’s group (Case 7). These statements suggest that, for corporate sellers, an acquirer’s plan for growing the business and the terms of any continuing supply relationship were part of the decision.

8. Syntax Partners

Syntax Partners is a Japan-based M&A advisory firm that acts solely as financial advisor. In any transaction, we advise one side only, either the buyer or the seller. We advise on Japan cosmetics OEM M&A in both domestic and cross-border transactions.

Buy-side advisory

For foreign investors considering acquisitions or capital alliances in Japan, we support the full process: mapping targets based on your strategy, including non-listed owner-run companies and businesses within Japanese corporate groups; approaching owners and parent companies directly; negotiation; and execution. In the cosmetics OEM industry, many targets are non-listed manufacturers that do not disclose their shareholders, or contract manufacturers and plants held within corporate groups; we take on the research and the direct approach to owners and parent companies. We work in Japanese and English, among other languages.

Sell-side advisory

As an advisor that maximizes the interests of sellers and owners, we support Japanese owners and parent companies considering a sale or business succession. The buyer universe we cover includes not only Japanese contract manufacturers but also private equity funds, adjacent-industry companies such as trading houses and packaging groups, and overseas strategic buyers such as consumer companies. Our transaction support draws on our understanding of the industry, including formulation and equipment by product category, supply relationships with brand owners, and manufacturing licenses and export-market regulation.

We welcome discussions at any stage, from early-stage exploration of acquisitions or partnerships in Japan to live transactions.

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This article was prepared by Syntax Partners, Inc. based on public information, including companies’ official announcements and IR materials, and statistics published by government agencies and industry associations.

Syntax Partners, Inc.