Kering sells beauty division to L’Oreal for $4.7 billion
Luxury group Kering, owner of Gucci, has agreed to sell its beauty division to L’Oreal for €4 billion ($4.66 billion), marking the biggest deal in L’Oreal’s history and a major strategic shift for Kering under new CEO Luca de Meo.
Under the agreement, L’Oreal will acquire Kering Beaute, which includes the high-end Creed fragrance line, as well as long-term exclusive licenses to produce beauty and fragrance products for Gucci, Bottega Veneta, and Balenciaga. The 50-year licensing deal will take effect once existing contracts — including Gucci’s current partnership with Coty, due to expire around 2028 — come to an end, News.Az reports, citing Reuters.
The sale marks De Meo’s first major step toward addressing Kering’s mounting debt, which stood at €9.5 billion as of June, alongside €6 billion in lease liabilities. Investors had expressed growing concern about the company’s balance sheet amid slowing sales at Gucci, its flagship brand.
Kering launched its beauty unit in 2023 after acquiring Creed for €3.5 billion to diversify beyond fashion. However, the division reported a €60 million operating loss in the first half of 2025, prompting De Meo to unwind one of former CEO François-Henri Pinault’s signature strategies.
Analysts at Bernstein called the sale “bitter but necessary medicine,” while RBC noted that returning to a licensing model would be “less capital intensive and higher margin,” freeing up funds for Kering’s core fashion and leather goods business.
Since taking over in September, De Meo has pledged to take “difficult decisions” to streamline operations and cut debt. Kering has already postponed plans to acquire full ownership of Valentino and is reportedly selling real estate assets to strengthen liquidity.
For L’Oreal, the acquisition represents a major expansion of its luxury fragrance portfolio, surpassing its $2.5 billion purchase of Aesop in 2023. The deal is expected to close in the first half of 2026.
L’Oreal already produces blockbuster scents under the Yves Saint Laurent brand, which it acquired from Kering for €1.15 billion in 2008. As part of the new agreement, the two companies will also establish a joint venture offering exclusive luxury services and experiences for high-end clients.
“L’Oréal is leveraging its strength in luxury beauty while Kering refocuses on fashion,” said Bruno-Roland Bernard, a corporate finance and luxury management expert at the Institut Français de la Mode. “With Kering under pressure, L’Oreal was likely in a strong bargaining position.”
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