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The parent company of iconic luxury brands like Gucci and Saint Laurent has agreed to sell its beauty business to L’Oreal. Kering announced the reported $4.66 billion agreement on Sunday. As part of the deal, L’Oreal, the world’s largest cosmetics company, will acquire Kering’s fragrance line Creed and exclusive rights to develop fragrance and beauty products for 50 years under Kering’s fashion labels, including Bottega Veneta and Balenciaga. The partnership also notably includes the rights to a 50-year exclusive license for Gucci, Kering’s flagship brand. That agreement will begin after the expiration of a current license with Coty ends in 2028. CNBC reported new Kering CEO Luca de Meo pursued the deal to tackle the luxury group’s high debt and refocus on its core fashion business. “This strategic alliance marks a decisive step for Kering,” de Meo said in a statement. “Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major Houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L’Oréal’s stewardship. “Together, we will also venture into new frontiers of wellness, combining the unrivalled expertise of L’Oréal with our unique luxury reach. This partnership allows us to focus on what defines us best: the creative power and desirability of our Houses.” Shares in Kering jumped 4.7% while L’Oreal rose 1.4% upon news of the partnership, according to CNBC. L’Oreal, the maker of Maybelline make-up and CeraVe skincare, already makes perfumes under the Saint Laurent label after acquiring rights to the brand from Kering in 2008. “This partnership will further solidify our position as the world’s #1 luxury beauty company and allow us to explore new avenues in wellness together.” said Nicolas Hieronimus, CEO L’Oréal Groupe. “The addition of these extraordinary brands perfectly complements our existing portfolio and significantly expands our reach into new, dynamic segments of luxury beauty. Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche fragrance market. Gucci, Bottega Veneta and Balenciaga are all exceptional couture brands with enormous potential for growth.” Beyond beauty, Kering and L’Oréal are also joining forces to explore business opportunities at the intersection of luxury, wellness, and longevity, they announced on Sunday.
