L’Oréal will take over Gucci-owner Kering’s beauty portfolio for $4.6 billion, according to an announcement on Sunday.
Under this deal, L’Oreal will acquire acquire Kering’s fragrance line Creed, which former CEO Francois-Henri Pinault acquired in 2023 for 3.5 billion euros ($3.8 billion), as well as exclusive rights to develop fragrance and beauty products for 50 years under Kering’s fashion labels including Bottega Veneta and Balenciaga. L’Oreal will also get the Gucci license for 50 years, once a deal with Coty expires. Analysts believe this deal will last till 2028.
“We believe selling Kering Beauté at around the same price paid for Creed two years ago is bitter but necessary medicine,” said analysts at Bernstein.
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Kering chief executive Luca de Meo said in a statement, that “Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major Houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L’Oréal’s stewardship.” “This partnership allows us to focus on what defines us best: the creative power and desirability of our houses,” De Meo added.
This will be L’Oreal’s largest acquisition till date. Earlier, the company had purchased Australia brand Aesop for $2.5 billion in 2023. Bernstein analysts said that this deal made sense strategically, with Creed being one of the most exciting brands in the growing luxury fragrances area.
Under the agreement, L’Oreal will have the exclusive right to make beauty products for both houses and for Gucci under 50 year agreements. It has made fragrances and cosmetics for Yves Saint Laurent since 2008, with particular success in fragrance and complexion products.
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This has been considered a significant step forward in reducing Kering’s net debt, which stood at 9.5 billion euros at the end of June, on top of 6 billion euros in long-term lease liabilities, sparking investor concern. It also signals a major shift in the direction the company is taking, less than two months after de Meo took over CEO his predecessor Francois-Henri Pinault.
Kering had launched its beauty division in 2023, appointing Raffaella Cornaggia as its head in an effort to bring more of its beauty business in-house. However, the initiative faced challenges, including the operational complexity of managing beauty brands and the impact of a broader luxury slowdown, which led to steep losses at Gucci and Alexander McQueen. Company executives have also expressed dissatisfaction with the performance of the Gucci Beauty line under Coty’s management.
The deal is expected to close in the first half of 2026. In addition to the $4.6 billion cash payment, L’Oréal will also pay royalties to Kering on its licensed brands, ensuring a continued partnership between the two French giants even as their business priorities diverge.