Estée Lauder set to close $2.8 billion deal to buy Tom Ford

Estée Lauder is close to closing a deal to buy Tom Ford for about $2.8 billion, including debt, outperforming several others interested in acquiring the luxury fashion brand, they said. informed people on the subject.

Tom Ford this week entered exclusive negotiations with Estée Lauder, which sells cosmetics brands such as MAC, Clinique and Aveda, and a deal could be announced as early as Monday (14), according to those people.

A deal between the two brands would underscore the strength of a luxury fashion and cosmetics market that remains resilient in the face of rising inflation and supply chain disruptions.

For New York-based Estée Lauder, the acquisition of Tom Ford would be the latest and largest in a series of transactions, including taking full control of Canadian beauty group Deciem for about $1 billion in 2021.

Goldman Sachs was hired to explore the sale of Tom Ford earlier this year and has received signs of interest from other luxury brands, including Kering, which owns Gucci. Estée Lauder already has an old licensing agreement for Tom Ford beauty and fragrance products, which could have complicated a deal with Kering.

As part of the combination with Tom Ford, launched by the eponymous designer in 2005, Estée Lauder would also acquire the apparel business, an area in which it has relatively little experience.

The Tom Ford beauty line has done particularly well in China, a growing market for both groups. It also has a very profitable eyewear business through licensing agreements with sunglasses maker Marcolin.

The Wall Street Journal reported last week that Kering was in advanced talks to buy Tom Ford for about $3 billion, putting itself ahead of Estée Lauder. However, negotiations with the Gucci owner fell apart as the two sides struggled to reach an agreement on multiple fronts, people familiar with the matter said.

Tom Ford is known for transforming Gucci in the 1990s from a family-owned leather company into a fashion powerhouse and the foundation for what is now Kering. He later left Gucci in 2005 to launch Tom Ford along with Domenico De Sole, who had joined Gucci in 1994.

While Tom Ford was successful, the company struggled during the coronavirus pandemic and was forced to lay off and lay off employees.