LG Household & Health Care, Korea's second largest cosmetics company, has taken over the Face Shop, purchasing a 90 percent stake in the nation's no.3 cosmetics firm for W350 billion, it was reported on Tuesday (US$1=W1,159).

Industry insiders view LG's takeover as a move to challenge industry leader Amore Pacific. Amore Pacific's sales in the cosmetics business totaled W1.27 trillion in 2008 compared to LG's W535 billion. With the acquisition LG will see its cosmetics sales near W770 billion. But Amore Pacific plans to focus on overseas markets with an aim to become a global brand.

"The domestic cosmetics market is overheated and oversupplied," an Amore Pacific spokesman said. "It doesn't mean very much to be the leader here anymore. We plan to accelerate our efforts to develop overseas markets."

Amore Pacific has worked aggressively to advance into the global market. It has 273 Laneige stores and 1,970 Mamond stores in China, Hong Kong and Thailand, as well as shops for its high-end brand Sulwhasoo in Hong Kong, New York and Tokyo. It has seen its overseas sales grow 24 percent on average every year since 2005, reaching W263 billion last year. They are expected to jump 20 percent to W316 billion this year.

LG is still in the early stages of developing overseas markets, with shops in 46 department stores in China as of last year. The Face Shop also has only 60 stores in China. "We plan to first raise our status in the domestic market before penetrate overseas markets in earnest," an LG spokesman said.