Luxury powerhouse Kering has announced the sale of its beauty division to L'Or⁘al for ⁘4 billion, in a landmark deal that marks a sharp strategic shift under new chief executive Luca de Meo.
The French group, best known for fashion houses Gucci, Balenciaga and Bottega Veneta, said on Sunday it would transfer ownership of its Creed fragrance line and grant L'Or⁘al 50-year exclusive licences to produce beauty and fragrance products for its brands.
The agreement, L'Or⁘al's biggest acquisition to date, underscores how both companies are reshaping their priorities.
For Kering, it represents a step back from beauty to refocus on its struggling fashion core. For L'Or⁘al, it expands its dominance in luxury cosmetics.
Under the deal, L'Or⁘al gains full rights to Creed, the heritage fragrance house Kering bought in 2023 for about ⁘2.94 billion. It will also hold long-term development rights for Kering's key fashion labels, beginning when existing contracts with Coty expire in 2028 for Gucci fragrances.
L'Or⁘al described the transaction as a transformative acquisition that strengthens its global luxury portfolio. The company already produces blockbusters such as Yves Saint Laurent Beaut⁘, acquired from Kering in 2008 for about ⁘970 million.
A spokesperson for L'Or⁘al said there were 'plenty of acquisitions being looked at this year', signalling that the group remains aggressive in pursuing premium brands.
Earlier this month, Reuters reported that Armani Group representatives had approached L'Or⁘al after the late Giorgio Armani named it among preferred buyers for a minority stake in his fashion house.
The ⁘3.36 billion sale is also a much-needed move to reduce Kering's debt, which stood at around ⁘7.98 billion at the end of June, excluding a further ⁘5 billion in lease liabilities that have worried investors.
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