In business it’s who you know that’s important. Just look at the new
shareholder in cosmetics group Jurlique. The dealmaking is the key and
Kerry Packer likes dealing with fellow billionaires.

Kerry Packer the investment banker? Smells like a good deal,
feels like a good deal, but is it? Kerry Packer obviously though it
was, after all it is a business mate who’s just clambered aboard the
Jurlique cosmetics company that Packer’s private company is a 25 per
cent shareholder.

The deal was the purchase of a 25 per cent
stake in Jurlique by the New York listed Triarc Cos, as it styles
itself. Triarc is chaired by New York and Palm Beach socialite
and market player, Nelson Peltz. According to last year’s Forbes 400
Nelson is around number 255 on its list of the 400 richest people in
the US of A. His wealth, around a billion in greenbacks.

He and
the Chief Operating Officer of Triarc, Peter May, control around 26 per
cent of the group, which has in the past owned brands such as Royal
Crown Cola and Snapple, another soft drinks/juice group. And is Triarc
a perfumer perhaps, or a company interested in Jurlique for its body
cleansers? Nope, it just looks like an opportunistic investor. But the
idea had to come from somewhere.

Well guess who are friends,
buddies and dealmakers together? None other that Kerry and Nelson. And
how did they meet? Through their respective shareholdings in US debt
collection company Encore Capital.

Kerry Packer has about a quarter according to these New York reports
and Nelson Peltz has around 20 per cent. Just the place to do deal,
organise a new shareholder for a small investment back home.

Back
in 1999, Packer and Peltz and other investors, including Triarc and
Peter May, Peltz’s partner, purchased $US40 million worth of securities
in a company called Able Telecom.

But where’s the logic to the
deal. There’s none. Triac, at the moment, is the proud owner of the
Arby’s roast beef fast food chain, with a mixture of more than 230
company owned stores, and the franchisor to more than 3,000 other
stores, mostly in the US.

Not much synergy there unless it is
for a new flavour of Jurlique body lotion (Yorkshire Beef and pudding
perhaps?). In its announcement to the New York market, Triarc said it
was buying a 25 per cent stake for approximately $US35 million, (or
just over $34 million), but it said, “Triarc’s interest will generally
represent an approximate 14.3 per cent voting interest in Jurlique.”

But
might there be some tensions ahead for the shareholders, new and old?
When CPH bought its original stake back in 2002, media reports said the
deal included an option to give CPH “majority control” of Jurlique.

And
in yesterday’s statement, Triarc’s Chairman and Chief Executive
Officer, Nelson Peltz, said: “With its unique franchise of natural
health and beauty products, we believe that Jurlique is a brand capable
of continued growth. As a result, we expect the value of our Jurlique
minority interest to grow over time.”

As any investor would. And
if Triarc has a 14.5 per cent stake, presumably CPH has a similar
holding. There’s no mention of whether the 2002 option is still in
place. The founders would appear to have the rest.

Jurlique was
founded by Dr Klein, a German biochemist and naturopath, and wife
Ulrike in 1983 and in 1985 they moved to the Adelaide Hills in South
Australia because they considered it an unpolluted site to grow herbs
and produce a natural skincare range. The company now makes more than
250 skin, hair and body care products and supplies retail outlets
worldwide, with more than 20 concept stores in Australia, another 20
overseas and distribution within the international beauty therapy,
department store, pharmacy and health food industries.

In
2002, when the Packers took their stake, turnover was put at around $80
million. In stories this year, its been put at $100 million, which
would make it the largest locally-owned company in cosmetics.

The
deal shows how the Packers managed to grow the deal faster than the
company.The Packers paid $25 million for its 25 per cent stake in
Jurlique in September 2002, then in another deal, it ended up in
Challenger Financial Services, before being flicked back to CPH
Investments for an implied profit of around $11 million. This is how
that deal was explained last year in The Melbourne Age.

CPH is
the “responsible entity” of Challenger, which, assuming the resolutions
on the latter’s corporatisation are all passed on December 22, will
forsake lucrative fees in favour of a compensation-based involvement
valued at $96 million”. Included in this was, “taking back its
investment in beauty products group Jurlique for $36 million,” in
shares in Challenger, plus another $60 million to represent other
rights that CPH had.

A bit of financial magic, but the Triarc
sale, if anything confirms the valuation on the CPH deal, and doesn’t
indicate any significant increase in value.

Peter Fray

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