TL;DR
- Kering SA will sell its beauty division, including Creed, to L’Oreal SA for €4 billion.
- This strategic alliance aims to accelerate expansion and realize long-term potential in beauty.
- The sale is Kering CEO Luca de Meo's first major move amid financial challenges.
As part of a long-term strategic alliance, Kering SA has agreed to divest its beauty division to L’Oreal SA, with Chief Executive Luca de Meo aiming to revitalize the French luxury giant's performance.
The proprietor of fashion labels such as Gucci stated that the agreement is intended to hasten expansion, as per a joint announcement released by the two firms on Sunday evening.
The transaction's worth is €4 billion (or $4.7 billion), as stated.
In 2023, Kering established its beauty division. That year, the company purchased the luxury perfume brand Creed for approximately €3.5 billion to establish its beauty division, though it's faced more urgent concerns since then.
Under the terms of the agreement, L’Oreal, the leading global company focused on cosmetics and beauty, will incorporate Creed into its existing collection.
By partnering with the foremost global beauty entity, we'll expedite the creation of perfumes and cosmetics for our prominent brands. This collaboration will enable them to attain significant scale within this sector and realize their substantial long-term potential. “Potential,” stated de Meo in the release.
This sale marks the initial strategic action by De Meo, who assumed his position in September, as Kering grapples with a downturn in Chinese consumer spending and the potential for increased U.S. Import duties. Investors are also concerned due to the group's substantial debt load.
The new CEO, succeeding Francois-Henri Pinault, is anticipated to present his strategic plan in the coming spring. The Pinault family holds a controlling interest in Kering, owning 42% of the company's shares and 59% of its voting power.
FAQ
What is Kering SA selling and to whom?
Kering SA is selling its beauty division, which includes the luxury perfume brand Creed, to L'Oreal SA.
What is the value of the transaction?
The transaction is valued at €4 billion, which is equivalent to $4.7 billion.
What is the stated aim of this sale for Kering?
The sale is intended to accelerate expansion and realize long-term potential in the beauty sector for Kering's brands.
When did Kering establish its beauty division and what was a key acquisition?
Kering established its beauty division in 2023 and purchased the luxury perfume brand Creed for approximately €3.5 billion that same year.
Is this the first major move by Kering's new CEO?
Yes, this sale marks the initial strategic action by Kering CEO Luca de Meo, who assumed his position in September.