Purplle in talks to acquire Sequoia-owned Faces Canada

Direct to consumer (D2C) brands have been the flavour of the year. Besides funding and growth in their scale in FY21, these homegrown brands are becoming lucrative acquisition propositions for large-scaled companies. After the acquisition of Dot&Key by Nykaa, the latter’s rival Purplle appears to be close to making its maiden buyout of 2021.

Purplle is in talks with direct to consumer (D2C) cosmetics brand Faces Canada for a potential acquisition, according to two people aware of the development.

“Purplle is in an advanced stage of negotiations to acquire cosmetics brand Faces Canada,” said one of the sources on condition of anonymity. “Purplle has given a definitive term sheet to Faces Canada and terms of the deal are almost accepted. If nothing goes south from here, the deal will be announced soon,” the person added.

Faces Canada is a Canadian cosmetics brand that was acquired by Everstone India-backed Indivision India Partners in 2007 and the company was launched in India in December 2009. It was later acquired by Sequoia Capital India in 2017.

“Sequoia has also given a green signal for the deal,” said the second source who also wished not to be named. According to this person, Sequoia has been leading talks for this transaction as the VC firm is a common connection in both companies.

ET had reported about the development on November 18.

Sequoia declined to comment on the story. Queries sent to Purplle did not elicit an immediate response. We’ll update the article as and when they respond.

It’s worth noting that Purplle had said it will go for acquisitions in the direct to consumer space when it raised over $100 million a few weeks ago.

Gurugram-based Faces Canada offers a line of high-quality makeup and skincare products. According to the company, its products are manufactured in Italy, Germany and Turkey. Apart from selling on online marketplaces, it has visibility across 1,500 cosmetic retail stores and its own outlets across India. 

While the company is yet to file its financial statements for FY21, it registered a minor decline in its operating revenue to Rs 98.68 crore in FY20 from Rs 105.8 crore in FY19. Its losses also surged by 208% to Rs 65 crore in FY20 from Rs 21.1 crore in FY19.

Purplle had recently raised over $100 million in its latest round led by Premji Invest and Kedaara Capital. According to Fintrackr’s estimates, the Manish Taneja-led company is currently valued at around $600 million.