PARIS: French luxury conglomerate Kering has agreed to sell its beauty division to L’Oréal for €4 billion ($4.66 billion), marking a pivotal strategic shift under newly appointed CEO Luca de Meo.
The deal includes the sale of high-end fragrance brand Creed and a 50-year exclusive licensing agreement for L’Oréal to develop beauty products under Kering’s flagship fashion labels: Gucci, Bottega Veneta, and Balenciaga.
The transaction, expected to close in the first half of 2026, is L’Oréal’s largest acquisition to date, surpassing its $2.5 billion purchase of Aesop in 2023. It also signals Kering’s retreat from direct beauty operations, just two years after acquiring Creed for €3.5 billion.
Strategic Realignment and Debt Reduction
Kering’s decision comes amid mounting pressure to deleverage. As of June, the group reported €9.5 billion in net debt and €6 billion in long-term lease liabilities. The beauty unit posted a €60 million operating loss in H1 2025, further straining resources.
CEO Luca de Meo, who took the reins in September, is reversing one of the boldest moves by predecessor François-Henri Pinault. Analysts view the divestment as a “bitter but necessary” step to refocus on soft luxury and stabilize financials.
“I am delighted to forge this long-term strategic alliance with one of the world’s most prestigious, creative and visionary luxury groups. This partnership will further solidify our position as the world’s #1 luxury beauty company and allow us to explore new avenues in wellness together.” said Nicolas Hieronimus, CEO L’Oréal Groupe.
“The addition of these extraordinary brands perfectly complements our existing portfolio and significantly expands our reach into new, dynamic segments of luxury beauty. Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche fragrance market. Gucci, Bottega Veneta and Balenciaga are all exceptional couture brands with enormous potential for growth.”
L’Oréal Expands Luxury Portfolio
Under the agreement, L’Oréal will gain full ownership of Creed and long-term rights to develop fragrances and beauty products for Kering’s fashion houses. The Gucci fragrance license, currently held by Coty, will transfer to L’Oréal upon expiry in 2028.
The companies also announced plans for a joint venture focused on luxury client services and wellness innovation, combining L’Oréal’s R&D capabilities with Kering’s brand prestige.
Gucci’s Growth Challenges
Gucci, Kering’s largest brand, continues to face headwinds, particularly in China. The group has postponed its full acquisition of Valentino and is exploring real estate divestments to raise capital.
Industry experts suggest L’Oréal’s timing may reflect a strategic advantage, with limited competition and Kering under pressure to act swiftly. The acquisition strengthens L’Oréal’s Luxe division, which already includes Yves Saint Laurent fragrances acquired from Kering in 2008.