Kanebo Ltd. and Kao Corp. said Monday they have again postponed signing a formal agreement to integrate their cosmetics businesses.
"It is taking a little more time than expected to agree on details, making it difficult to announce (an agreement) in January," Kanebo and Kao said in a joint statement.
They said in October they would integrate their cosmetics operations by the end of March 2007.
Though a formal agreement was initially planned to be signed by the end of 2003, the two companies said in late December they would sign it in January.
Industry sources said the two companies are having difficulty agreeing on the value of their brands, such as Kao's Sofina and Kanebo's T'estimo.
Under a basic agreement, Kanebo, Japan's second-largest cosmetics maker after Shiseido Co., will set up a new company by the end of March by spinning off its cosmetics operations.
Kao, Japan's top maker of household products, will spin off its cosmetics business into the new company and take a 49 percent stake in it.
With Kao's investment, Kanebo hopes to eliminate its negative net worth of 62.9 billion yen.
Kanebo and Kao have different assessments of the value of each other's brands in the cosmetics business -- estimates that will be used as a basis for calculating Kao's investment in the new company.
A source familiar with the negotiations said, "Kao insists on an amount in the upper half of the 100 billion yen level while Kanebo wants to secure more than 200 billion yen."