MILAN (Reuters) -French luxury group Kering, owner of the Gucci brand, is on the verge of selling its beauty division to L’Oréal, two sources familiar with the matter told Reuters.
According to one of the sources, the operation would represent around four billion dollars (3.43 billion euros), as reported by the WSJ.
As part of this operation, L’Oréal, the world’s number one cosmetics company, would acquire the Creed perfume brand and obtain the rights to develop beauty products linked to Kering’s fashion brands, notably Bottega Veneta, Balenciaga and McQueen, the American economic and financial daily reported.
An agreement could be announced next week, the daily added.
Kering, controlled by the Pinault family, launched its beauty division in 2023 with the acquisition of high-end perfume brand Creed for 3.5 billion euros in cash.
Kering declined to comment, while L’Oréal has not yet responded to a Reuters request for comment.
If the deal is confirmed, the sale would be a major step for Kering’s new chief executive, Luca De Meo, who officially took office in September, as he seeks to reduce the group’s debt, a subject of concern for investors.
Kering’s net debt stood at 9.5 billion euros at the end of June.
The group is struggling to revive sales of its Gucci brand, in a luxury market hit hard by a drop in consumer demand, particularly in China.
Since Kering’s announcement in mid-June of the arrival of Luca De Meo, the luxury group’s shares have jumped around 60%.
L’Oréal has also been approached by representatives of the Armani Group to purchase a minority stake in the Italian fashion group, Reuters reported this month.
In his will published last month, the late Italian designer Giorgio Armani asked his heirs to sell a 15% stake in the fashion house within 18 months of his death, then transfer a further 30% to 55% to the same buyer, or consider an IPO failing that.
The will says priority should be given to luxury conglomerate LVMH, L’Oreal and eyewear maker EssilorLuxottica.
(Written by Rajveer Singh Pardesi in Bangalore, with Lisa Jucca and Abigail Summerville; Claude Chendjou)
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