OPI Was in Play as Acquisition Target Before Coty Buy

I Products Inc., the North Hollywood-based family business that grew into one of the largest nail care manufacturers in the world, had been an acquisition target by other companies before Coty Inc. won out, according to the New York-based beauty care giant. Coty announced last week it was buying OPI for an undisclosed sum saying that expanding its reach into the nail polish market was behind the acquisition. OPI grew in the nail care market through an extensive distribution network, color offerings with creative names, and endorsements from top Hollywood celebrities. Coty owns the Sally Hansen color line and with OPI under its roof adds 200 colors of OPI’s Nail Lacquer chip-resistant formula. As for the story behind how a family-run business in the San Fernando Valley was wooed by the global giant, nobody is talking. Harris Shepard, long-time publicist for OPI, refused to make a company representative available and also refused to discuss the background of the deal except to repeat what had been put into a press release that operations in North Hollywood would remain the same and the management team, including founder and CEO George Schaeffer and executive vice president Suzi Weiss-Fischmann, would stay on after the acquisition. Lindsay Wooten, an outside media contact for Coty, refused to make a Coty representative available and would only respond to written questions via e-mail. In one of the responses, Coty said there had been other companies that were interested in OPI and but that it was with Coty that OPI would find the best fit. As the deal was just made, the company is still assessing the situation but has a goal of a seamless transition. “However, Coty has a strong track record of successfully integrating brands, both bigger and smaller than OPI, into our portfolio,” the company said. Buying spree The OPI acquisition is just one of three that Coty has made of late. In mid-November, the company bought all shares in Dr. Scheller Cosmetics AG from Russian cosmetics firm Kalina Group. That move makes Coty the second largest player in the German market. Later that month came a deal to buy philosophy Inc. and add it to the Coty Prestige Division. The philosophy product line is expected to generate sales of more than $200 million in 2010 and is sold at upscale retailers such as Sephora, Ulta and Nordstrom. In the e-mail response, the company said the buying spree was part of an overall strategy to build its brand and to grow through acquisitions, line extensions and new licenses. Less publicized was the announcement of the closure of Coty’s manufacturing and distribution center in North Carolina with a loss of more than 400 jobs. The company wanted to find a buyer for the facility but being unable to do that decided to move ahead with closing it as part of a consolidation effort. Coty took ownership of the plant with its 2007 acquisition of Del Laboratories. The burst of color that OPI brings to the Coty portfolio had humble beginnings at a dental supply business started by Schaeffer, a Hungarian immigrant. He found that the acrylic material used to make dentures could also be used for artificial nails and started a new business in 1981 to serve nail technicians. Global power It is the company’s nail lacquers that have made it a global power in the beauty care industry. Shunning simple names, OPI instead comes up with creative names for its polishes, like “I’m Not Really a Waitress,” “Polar Bear,” and “Didgeridoo Your Nails.” OPI has been successful in getting its products onto the nails of top Hollywood celebrities. Madonna, Barbra Streisand and Tori Spelling all have favorite colors. In January, the company launches a product line with singer Katy Perry. As OPI is brought into the Coty fold, it would be surprising if the formula for success is tampered with. Schaeffer will still be in charge and perhaps other family members will be in line to succeed when he decides to step away. In a 2005 interview with the Business Journal when OPI was given a Family Business Award, Schaeffer said his plan was to turn the company over to his children. Robbie Schaeffer operates the ROBB OPI Concept Salon in Studio City and daughter Nicole also is involved with the business.