L Catterton's Strategic Share Sale: A Boost for ODDITY's EPS and ROE

ODDITY Tech Ltd. (NASDAQ: ODD) recently announced a significant transaction with L Catterton, a leading global consumer-focused private equity firm. L Catterton has agreed to sell approximately 2.35 million Class A Ordinary Shares of ODDITY for a total cash consideration of approximately $100 million, at a purchase price of $42.501 per share. This transaction is a strategic move for both parties, with potential implications for ODDITY's earnings per share (EPS), return on equity (ROE), and long-term growth prospects.

The share repurchase by ODDITY is expected to have a positive impact on its EPS and diluted EPS. By reducing the number of outstanding shares, the company increases its EPS and diluted EPS. Assuming ODDITY had 100 million shares outstanding before the repurchase, EPS would have been $1.27. After the repurchase of 2.35 million shares, EPS increases to $1.33, demonstrating the positive impact of share repurchases on EPS and diluted EPS.



This transaction also influences ODDITY's future share buyback plans and potential dividend payouts. The company's board of directors determined that the repurchase is in the best interest of the Company, given the significant strength of its balance sheet and prevailing circumstances. The transaction is independent of the Company's standing share buyback plan, announced on June 7, 2024, and authorizing the Company to purchase up to $150 million of the Company's shares over 3 years. The standing share buyback plan will continue as planned, subject to its terms, including the availability of distributable funds.

The share buyback from L Catterton also impacts ODDITY's ownership structure and voting power. L Catterton's ownership in ODDITY decreases from approximately 7% to 4%, or 4 million shares, representing a significant decrease in L Catterton's voting power. This shift in ownership structure may impact strategic decision-making and board representation, potentially giving ODDITY's management more control.

This transaction aligns with ODDITY's broader capital allocation strategy and long-term growth plans. The company prioritizes reinvestment, M&A, and share buybacks, with the $100 million repurchase representing 147 million year-to-date. ODDITY's strong balance sheet, with $248 million in cash, equivalents, and investments, and no financial debt, supports this strategy. The transaction also reduces L Catterton's ownership to 7%, further empowering ODDITY's management.

In conclusion, L Catterton's strategic share sale to ODDITY is a win-win situation for both parties. ODDITY benefits from an increase in EPS and ROE, as well as a shift in ownership structure that empowers its management. Meanwhile, L Catterton realizes a significant cash return on its investment. As ODDITY continues to execute its capital allocation strategy and long-term growth plans, investors should monitor the company's progress and consider its potential as a stable, predictable, and lucrative investment opportunity.