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Shiseido Seeks Firm Foundation With Giant Cosmetics Deal


The world in your hands: An overnight, overseas update

When you're 138 years old, a little sprucing up works wonders. Japan's biggest cosmetics company, Shiseido (SSDOF), can trace its origins back to 1872; in contrast, Estee Lauder's (EL) Origins just turned 20. Thus, to help it stay young, the beauty behemoth bought San Francisco-based Bare Escentuals (BARE), a relative baby, born only in our bicentennial year, for $1.7 billion today as it aims at overseas expansion. While representing a full 43% premium on Bare's Thursday close, initial market reaction was favorable with Shiseido shares ending up over 5% in Tokyo trading as the Nikkei Index hit a fresh 15-month high Friday.

The California company is apparently a major force in the "mineral foundation market", which is enjoying good growth. I wouldn't know about that, but am sure of one thing: The sort of hand-wringing that accompanied Japanese takeovers of America Inc in the late '80s will be entirely absent this time. The Land of the Rising Sun is now seen as an infinitely lesser threat to our economic ascendancy than is China.

Speaking of, ever since getting it back from the British in a 1997 handover, China has been careful not to kill the golden goose that is Hong Kong, arguably the most mercantile and market-friendly society on Earth. Today brings two additional items of evidence testifying to the island's enduring importance. The Financial Times says George Soros, who always goes where the money is, plans to open an office there, and its oversubscribed IPO of Russian aluminum outfit Rusal just racked up orders of $2.6 billion.

Regarding Russia, remember when one of its ex-KGB agents met an untimely end at the hands of radioactive sushi? The current president of neighboring Ukraine almost expired due to similar shenanigans a few years ago, and is likely to meet his political demise in Sunday's elections, which could be won by the woman with hands down the best hairstyle in politics. All kidding aside, acting as a strategic buffer between Europe and an increasingly reactionary Russia, Ukraine is an important emerging market for investors and the vote bears worth watching.

The euro fell to its lowest level in a month against the dollar earlier today. Partly due to rumors, since rejected, that German Chancellor Angela Merkel may resign.

Staying in Euroland, a report released today showed a slight pick up in inflation. It remains extremely subdued however -- if only India and China could say the same.
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