Kering to Sell Beauty Business to L'Oreal for €4 Billion

Gucci owner Kering is selling its beauty business to French cosmetics giant L’Oréal in a €4 billion ($4.66 billion) deal, marking a significant strategic shift under new CEO Luca de Meo, according to news reports. 

The sale reflects Kering’s efforts to reduce its high debt levels and concentrate on its core fashion brands amid declining growth at Gucci and challenges in expanding the beauty segment.

Details of the Sale

Under the agreement, L’Oreal will acquire Kering’s fragrance line Creed, which former CEO Francois-Henri Pinault purchased in 2023 for €3.5 billion. The deal also grants L’Oreal exclusive rights for 50 years to develop fragrance and beauty products under Kering’s fashion labels, including Bottega Veneta and Balenciaga. Once a deal with Coty expires, L’Oreal will also secure the Gucci license for 50 years.

Strategic Impact and Financials

The acquisition will be L’Oreal’s largest to date, surpassing its $2.5 billion purchase of Aesop in 2023. For Kering, the sale is a crucial step toward reducing net debt, which stood at €9.5 billion at the end of June, alongside €6 billion in long-term lease liabilities. 

The beauty division struggled to scale, reporting a €60 million operating loss in the first half of the year. Slowing demand for Gucci in China, with a 25% revenue drop in the latest quarter, added pressure on Kering to deleverage.

De Meo has indicated plans to take difficult decisions, including rationalising operations and selling stakes in real estate to raise cash, while postponing plans to fully acquire Valentino.

L’Oreal’s Strategic Gain

L’Oreal, maker of Maybelline and CeraVe, already produces successful perfumes under Yves Saint Laurent and plans to create a joint venture with Kering to provide luxury client services. Fragrances contributed around 14% of L’Oreal’s 2024 revenues and were growing strongly in Q2.

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Conclusion

The deal, advised by Evercore and Centerview for Kering and Bank of America and Rothschild for L’Oreal, is expected to close in the first half of 2026. It represents a major step in Kering’s refocusing on fashion while giving L’Oreal a strong foothold in the luxury fragrance and beauty segment.

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