The acquisition of Estée Lauder Cos.  Said Mulling Tom Ford – WWD

The acquisition of Estée Lauder Cos. Said Mulling Tom Ford – WWD

The Estee Lauder Cos. has emerged as a surprise frontrunner in acquiring Tom Ford International, according to industry sources.

While the deal is far from final and bank sources said other players are also in the picture, Clinique owners Bobbi Brown and Jo Malone are said to be in talks to acquire the luxury fashion label.

As the Wall Street Journal first reported, the beauty giant has been in negotiations for the past few weeks with Tom Ford, who has been actively looking for a buyer with the help of investment bank Goldman Sachs, and the number on the table is said to be around US$3 billion -dollars, industry sources confirmed.

For now, both parties are publicly silent, with a rep for Lauder declining to comment on the matter, while a spokeswoman for Tom Ford did not respond to requests for comment. Goldman Sachs also did not respond to a request.

While such a deal would be the cosmetics giant’s first foray into fashion, it has a long-standing licensing partnership with Tom Ford Beauty and the so-called ultra-prestige brand has thrived, particularly in the fragrance category.

At a recent Deutsche Bank conference in Paris, Tracey Thomas Travis, Lauder’s Chief Financial Officer, said, “Tom Ford and Jo Malone are two of our biggest mid-market brands knocking on the door to break the $1 billion mark to become big brands in the next few years.”

She said that much of Lauder’s M&A has focused on skincare and makeup, “But fragrance is also an M&A opportunity for us given the success we’ve had with the strategy shift we’ve been fighting.”

And while there are questions about how Lauder would handle the ready-to-wear business, Lauder’s most recent quarterly filing for the three months ended March 31 details how much Tom Ford is already contributing on the beauty side.

Fragrance net sales were reported to have increased over the three months, driven primarily by Jo Malone London, Tom Ford Beauty, Le Labo and Estée Lauder, totaling approximately $107 million combined. Lauder’s total fragrance sales for the quarter were $579 million. The increase in Tom Ford Beauty “benefited from the continued success of the Private Blend and Signature fragrances and the product launches of Costa Azzurra Parfum, Rose de Chine and Rose d’Amalfi in the third quarter of fiscal 2022,” the company said.

A bank source told WWD such a move could be the start of positioning itself as a luxury brand like LVMH Moët Hennessy Louis Vuitton and Kering.

Another financial source noted that most of the deal’s value would come from cosmetics and fragrances, with eyewear being manufactured under license: “It doesn’t surprise me at all that Estée Lauder would want something like that.”

The source said sales of Tom Ford fragrances were estimated at around $275 million, but warned that even if makeup and eyewear were that big, “$3 billion is a huge number for the.” rating seem to be”.

It’s relatively common for hefty takeover prices to be leaked to the press in hopes that a little publicity will help while negotiators work to finalize the terms of the final deal. Should that price nevertheless materialize, it would be Lauder’s largest acquisition to date, after the company agreed to pay $2.2 billion for a majority stake in Deciem in 2021.

But according to bank sources, there are other interested parties.

Recently, Kering, the owner of Gucci, said it was considering entering the beauty segment during the first-half results, although it didn’t specify whether it could follow in Hermès International’s footsteps by launching its own beauty lines brings to market, or whether it does was looking for acquisitions.

“Beauty is definitely an area where we could consider some initiatives in the future and all options are open,” said Jean-François Palus, CEO of the group.

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