Cosmecca Korea Co., a South Korean contract manufacturer of cosmetics that has been seeking to tap the U.S. market, has decided to buy a 34.71 stake in U.S. cosmetics maker Englewood Lab Inc. for 57.8 billion won ($53.7 million).

Cosmecca said in a regulatory filing on Tuesday it will acquire 6,896,000 shares of the New Jersey-based company for 57.8 billion won, an amount equivalent to 50.9 percent of the Korean firm’s equity capital. It aims to officially take over management on June 8.

Founded in 2004, Englewood Lab is a contract manufacturer of cosmetics with extensive research and development capabilities. It became the only U.S.-based cosmetics maker to be listed on Korea’s secondary Kosdaq market in 2016. Its plants in Englewood and Totowa of New Jersey are capable of making 87 million products per year while its production unit in Namdong industrial complex in Incheon, Korea annually churns out 100 million products.

With the deal, Cosmecca’s total production capacity would be ramped up to 737 million units from 550 million as of late 2018.

Cosmecca has been seeking to enter the U.S. market ever since it established its first overseas outpost in China in 2014. The company said the Englewood Lab acquisition would help it boost sales at home by adding luxury beauty labels to its client roster. It will also be able to produce its formulation in the U.S. and supply its cosmetics products directly in the U.S. market.

Cosmecca said it will foster research collaboration between the two countries to upgrade its overall R&D capacity. It plans to introduce its self-developed production system to the U.S. plant and support Korean clients seeking to enter the U.S. market.

Shares of Kosdaq-listed Cosmecca closed Tuesday up 1.59 percent at 76,800 won while Englewood shares plunged 15.46 percent to 6,290 won.

By Song Min-geun and Kim Hyo-jin

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