Beauty tech, L’Oréal partner Perfect Corp. jumps on take-private deal

Shares of Perfect Corp., a small-cap developer of AI-powered beauty solutions and a partner to global brands like L'Oréal, surged more than 10% on Friday. The company signed a definitive agreement to sell the business to an entity controlled by its founder, Alice Chang, after which it will be delisted.

Perfect Corp. climbed more than 10% on the New York Stock Exchange on Friday to $1.92 per share. That marked its highest level since the middle of December.

The AI solutions developer announced a merger with ProjectNY, a company controlled by founder Chang. Under the terms of the deal, shareholders will receive $2 per share in cash, representing a premium of approximately 48.1% to the March 17 closing price, the last trading day before the company announced it had received a preliminary going-private proposal from a consortium led by Chang, according to the press release. The offer also represents a premium of approximately 39.6% to the volume-weighted average closing price over the 30 trading days preceding that announcement.

The board of Perfect Corp. has already approved the merger, which now requires the support of at least two thirds of shareholders. Holders of approximately 53.4% of the company's outstanding shares and approximately 81.2% of its voting power have agreed to vote in favor of the transaction, according to the press release.

The parties expect to complete the deal during the fourth quarter. If completed, Perfect Corp. will become a privately held company and its shares will no longer trade on the NYSE.

Perfect Corp. was founded in 2015 after being spun off from Taiwanese software developer CyberLink, which Chang cofounded with her husband in 1996 and led for 18 years.

As personal computer sales slowed, Chang began exploring expansion into the growing smartphone market. The company's first apps were YouCam Perfect, which lets users remove blemishes or dark circles from photos, and YouCam Makeup, which enables virtual makeup application. Forbes later dubbed Chang the "godmother of virtual makeup."

Initially, Chang did not monetize the technology. She later began pitching it to major cosmetics brands based on a simple idea: "if you try more, you buy more." Today, Perfect Corp.'s business consists of two segments: consumer apps and enterprise solutions for brands. Its partners include L'Oréal, Estée Lauder, Sephora, Shiseido, and Avon.

In the first quarter of this year, the company's revenue increased 12% year over year to $17.9 million, while net income rose 2.6% to $2.4 million.

Year to date, Perfect Corp. shares have gained around 6%. According to MarketWatch data, all three Wall Street analysts covering the stock have "hold" ratings. The average target price is around $2 per share, broadly in line with the ProjectNY offer.