(News Bulletin 247) – According to the FinancialTimesthe owner of the Gucci or Saint Laurent brands would have spent 3.5 billion euros to buy the high perfumery house Creed.

Kering would not have looked at the expense to afford the high perfumery house Creed and thus accelerate in the growing segment of luxury beauty products.

The owner of the Gucci or Saint Laurent brands would have paid the tidy sum of 3.5 billion euros to take control of this Anglo-French house founded in 1760, report four people familiar with the case. FinancialTimes.

At the end of June, Kering announced the acquisition of Creed from funds controlled by BlackRock long term private capital Europe and Javier Ferrán, current president of the company, but the group had not disclosed the amount of this transaction.

The company headed by François-Henri Pinault had then deliberately wished to conceal this crucial information, so as not to reveal the “considerable” margins made by Creed, say two sources familiar with the matter. Financial Times.

Kering said Creed had revenue of more than 250 million euros in the year to the end of March. Revenues to be put into perspective with an Ebitda (gross operating surplus) of around 150 million euros, which gives it a corresponding margin of more than 50%, report these same sources. Kering declined to comment on this information to the Financial Times.

A “high price”

For its part, Royal Bank of Canada (RBC) at the end of June attributed to Creed an enterprise value of between 1 and 2 billion euros, “and more likely at the top of this range”. To formulate this estimate, the research department then relied on the multiples of recent comparable transactions in the beauty sector, which “are 4 times the enterprise value in relation to turnover and 20 times the enterprise value in relation to the gross operating surplus” like the acquisition of Aesop by L’Oréal, carried out last April.

Quoted by FinancialTimes, Thomas Chauvet, an analyst specializing in the luxury industry at Citi, believes that the acquisition of Creed by Kering was carried out at “a high price”. “It’s expensive … but it gives them the necessary credibility to show that their beauty ambitions are serious”, abounds the analyst to the financial newspaper.

“Even if profitability were very high, this price would be significantly higher than recent transactions in the Perfumes segment and would bring out” enterprise value multiples of 14 times sales and 23 times EBITDA, stresses Invest Securities. “Multiples without comparison with those of Kering (respectively 3.2x and 9.2x) which are similar to those of Hermès (respectively 13.9x and 30x)”, adds the design office.

Kering’s financial director, Jean-Marc Duplaix, declared for his part to AFP that Kering had paid for Creed “a price which is commensurate with the quality of this absolutely unique asset”, judging it “consistent” with those practiced “in the past, in this segment”.

The acquisition of Creed is indeed an important building block of the new Kering Beauté division, launched last February by the French luxury giant and led by a former executive from Estée Lauder, the American cosmetics giant. Kering explained that this purchase would allow its Kering Beauty division “to acquire a critical size for its future growth, in a strategic market segment”.

This external growth operation was then welcomed by the market, because it could revitalize a group whose performance emerged mixed at the end of its first quarter. In recent years, Kering has posted weaker growth than its rivals LVMH or Hermès, and still suffers from its increased dependence on Gucci, its biggest brand.

On the Paris Stock Exchange, Kering is moving down slightly from 0.3% to 476.35 euros in a Parisian market in search of a clear direction.