Estée Lauder spends $2.8B to acquire Fashion brand Tom Ford
Estee Lauder Cos. agreed to acquire Tom Ford at a valuation of $2.8 billion, marking the beauty company's biggest-ever deal.
Upon acquisition, Estée Lauder will own a valuable licensing agreement under which the company must sell Tom Ford's beauty and fragrance lines for nearly two decades.
Estée Lauder will pay approximately $2.3 billion for the Tom Ford brand and all of the fashion company's intellectual property. This amount will be paid in cash, debt and deferred payment of 300 million USD. Furthermore, $250 million will come from eyewear maker Marcolin SpA, whose current license with Tom Ford is about to be renewed, according to a statement by Estée Lauder on November 15.
Tom Ford will also renew their long-term license for men's and women's fashion, accessories and similar products to current partner Ermenegildo Zegna NV for 20 years. This agreement comes with a 10-year auto-renewal provision if minimum performance conditions are met. Italian fashion house Zegna also owns the Thom Browne brand and executives have said they want to expand further in the US market after the company went public in New York last year.
The acquisition is expected to be completed in the first half of 2023.
The acquisition will help reinforce Estée Lauder's growth plans for Tom Ford's beauty business.
Estée Lauder decided to invest in the perfume business as the market is forecasted to be on the rise and could reach nearly $48 billion in size by 2027, higher than last year's estimate of $33.5 billion, according to market research firm IMARC Group.
This beauty company is also trying to close the gap with rival L'Oreal SA which owns more high-end beauty brands including Yves Saint Laurent, Prada and Valentino. That gives L'Oreal an edge over Estée Lauder in this area, especially in China, an important market for the beauty industry.
Last year, Estée Lauder bought a majority stake in Deciem, a Canadian skin care brand, giving Deciem a valuation of $2.2 billion. According to its annual report published in August 2022, the Lauders control 84% of Deciem's voting power.
Estée Lauder spends $2.8B to acquire Fashion brand Tom Ford
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