“Gucci and Balenciaga owner sells cosmetics division to L’Oreal for $4.7 billionKering is selling its cosmetics division to L’Oreal for $4.7 billion to reduce debt and focus on its core business. L’Oreal will
acquire rights to the Gucci, Balenciaga, and other brands, as well as the perfume brand Creed.
”, — write: unn.ua
Gucci owner Kering (PRTP.PA) has agreed to sell its cosmetics business to L’Oreal (OREP.PA) for 4 billion euros ($4.66 billion – ed.), a significant change in strategy for new CEO Luca de Meo, who aims to address the luxury group’s high debt and refocus on its core fashion business.
Under the agreement, L’Oreal will acquire the Creed perfume brand, which Kering bought in 2023 for 3.5 billion euros, and will also receive exclusive rights to create cosmetics and perfumes under the Bottega Veneta, Balenciaga, and other group brands for the next 50 years. In addition, L’Oreal will secure a 50-year license for Gucci products after the current contract with Coty, which experts estimate will run until 2028, expires.
Bernstein analysts noted that the sale of Kering Beauty “is an unpleasant but necessary step,” as the company feels the need to reduce its debt burden.
Although the sale of the cosmetics business was discussed even before the arrival of the new CEO Luca de Meo, it was he, according to sources, who significantly accelerated negotiations with L’Oreal in October. For L’Oreal, in turn, this will be the largest acquisition in the company’s history, even larger than the purchase of the Aesop brand in 2023 for $2.5 billion. Experts emphasize that the purchase of Creed has great strategic value, as the brand is considered one of the most promising in the luxury perfume sector.
The sale will help Kering significantly reduce its debt, which exceeded 9.5 billion euros at the end of June, not including another 6 billion euros in lease obligations. This decision also symbolizes a shift in the company’s strategy, which de Meo is implementing.
AdditionKering created its own cosmetics division in 2023 after acquiring the Creed perfume brand, trying to reduce its dependence on the flagship Gucci brand, which brings in most of the group’s profits.
However, developing the beauty segment proved more difficult than expected: in the first half of 2024, this division incurred losses of 60 million euros. At the same time, the company is facing a decline in Gucci sales – in the second quarter, the brand’s revenue decreased by 25% due to a drop in demand in the key Chinese market. This forced Kering to look for ways to reduce debt.
In particular, Kering has suspended plans for a full acquisition of the Valentino brand and is considering selling part of its real estate to raise funds.
For L’Oreal, which already produces Yves Saint Laurent perfumes (the company has owned the brand rights since 2008), this deal will be a logical continuation of its expansion in the luxury cosmetics segment. Both companies also plan to create a joint venture to improve customer service in the luxury sector. According to Bernstein analysts, perfume sales account for about 14% of L’Oreal’s revenue, outperforming the rest of the cosmetics market.
Negotiations between Kering and L’Oreal were accompanied by financial advisors – Evercore and Centerview on Kering’s side, and Bank of America and Rothschild on L’Oreal’s side. The deal is expected to be finalized in the first half of 2026.
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