IWP International, the industrial holding company, has bought a majority stake in a British cosmetics company for £38.5 million. The company has also announced pre-tax profits of £22.4 million, a marginal increase of 3.5 per cent on last year.

IWP is buying 80 per cent of cosmetics company Constance Carroll Holdings, one of the largest manufacturers in Europe of colour cosmetics and personal care aerosols, which also make skin care products and perfumes, it has an option on the remaining 20 per cent in three years.

IWP said it had also completed a $100 million private placement in the US which would help fund the acquisition. IWP chief executive Mr Joe Moran said the deal would add about lp onto the dividend next year.

Based in Lancashire, Constance Carroll is a private company which was founded 18 years ago. It manufactures cosmetics aimed at people on a tight budget and exports its products to over 100 countries and has invested £10 million to upgrade its plant in the last four years.

IWP director Mr Neil Popharn said Constance Carroll was a market leader in budget brand cosmetics and exports to Europe account for two-thirds of its business. The company, which has an annual turnover of around £30 million has recently moved into manufacturing hairspray products, which IWP said is now the biggest single personal care market in the EU.

IWP director Mr Richard Hayes said IWP's turnover will be £260 million per annum, following the acquisition. Net cash generated will be £8 million-£10 million. Debt will be £65-£75 million and interest will be covered eight times by profit.

Mr Joe Moran said the company was a very good fit with IWP's other divisions. IWP operates two core divisions Personal Care/household Products and Labels/Distribution.

Shareholder approval for the deal must be sought and an extraordinary general meeting will be held on July 1st. The two sides had been talking for the past 15 months, and the acquisition is IWP's biggest since 1993.

Mr Moran said the $100 million, private placement, comprises Senior unsecured notes which mature in 10 years. He said the coupon rate of 7.73 per cent had been very favourable.

Meanwhile, IWP's preliminary results for the year ended March 31st last showed that turnover rose by almost 25 per cent to £207 million, compared to 1995. The dividend is 5.34p, up 10 per cent The company said difficulties in the marketplace, which it had overcome, were overshadowed by the strength of the Irish pound versus the Dutch guilder.

Mr Moran said operating profits from the group's Dutch interests amount to around £15 million per annum. He said the variations in the currency would have added about £1.4 million to profits.

Excluding the Constance Carroll Group, which employs 500 people, IWP now employs 2,280 people. In Ireland the company employs 250 people. It has a labels business in Drogheda and four centres trading under the name of The Panelling Centre.