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Shiseido Co. has agreed to sell its shampoo and affordable skin-care business to CVC Capital Partners in a deal worth ¥160 billion ($1.5 billion), as the Japanese beauty giant shifts its focus to making and selling high-end skin products.

The operations divested include well-known drugstore brands such as Tsubaki hair-care products and Senka face wash, the company said in a statement Wednesday.

Shiseido, founded more than 140 years ago as a pharmacy in the Ginza district of Tokyo, has been revamping its portfolio as the novel coronavirus outbreak has changed up cosmetic and personal care routines, dealing a blow to beauty companies.

The lifestyle and personal care business had represented about 10% of Shiseido’s revenue in 2019, with annual sales of about ¥100 billion.

Under the deal, Shiseido will transfer its personal-care business in Japan and other countries to a holding company that CVC will invest in, with the transfer price of the business and assets valued at ¥160 billion.

The transfer date is set for July 2021, after which Shiseido will acquire a 35% stake in the holding company that will operate the business. CVC will oversee the new company, which may go public in the future.

“The personal care business model is very different from our focus as a beauty company,” Chief Executive Officer Masahiko Uotani said in a news briefing Wednesday. Though Shiseido’s business has been impacted by the pandemic, the company had not made a hasty decision to sell off the segment, he said.

Shiseido has been debating the future of its personal care business for many years as the company has not been able to prioritize the segment and give it the marketing or research and development resources needed to grow, Uotani said, adding that CVC and other potential partners had approached the company in the past, but he had thought then it was too premature to sell the business.

Shares of Shiseido have climbed more than 10% since discussions of a sale were first reported, and the stock rose 1.5% in Tokyo trading Wednesday before the formal announcement. On Monday, Shiseido had boosted its fiscal year guidance, saying it expected to post an operating profit instead of its earlier projection for a loss. The company will report earnings Tuesday.

Shiseido plans to announce the impact of Wednesday’s deal on earnings in May.

The beauty company has been seeking to exit noncore businesses by the end of 2021 as part of a revamp and a new mid-term plan for 2023. Bloomberg Intelligence analyst Catherine Lim said funds from the sale could be used to achieve Shiseido’s 2023 goals and grow the company’s digital beauty and e-commerce business.

“It might be the company has started to take more radical and more agile management decisions,” Jefferies analyst Mitsuko Miyasako wrote in a note on Jan. 22 after Bloomberg first reported the potential sale. It’s likely that Shiseido would continue to divest more segments not core to its business revamp, she added.

Uotani has continued to hint over the past year that asset sales are necessary as the company prioritizes cash.

Japanese firms have started looking closely at the domestic market and the health of their balance sheets as the pandemic continues to halt international travel. That means more companies are offloading noncore assets as part of their strategic review. In December, Hitachi Ltd. agreed to sell a partial stake in its overseas home appliance business.

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