L’Oreal acquires Gucci-brand beauty unit from Kering for $4.7 billion

New Delhi: Gucci owner Kering has agreed to sell its beauty business to L’Oreal for 4 billion euros ($4.7 billion), marking the first significant move by new CEO Luca de Meo as he implements strategic changes at the luxury group.

Under the deal, L’Oreal will acquire Kering’s fragrance brand Creed, along with exclusive rights to develop fragrance and beauty products for 50 years under Kering labels including Bottega Veneta and Balenciaga.

 The transaction represents a shift in direction from the group’s previous strategy under former CEO François-Henri Pinault, who acquired Creed in 2023 for 3.5 billion euros.

Shares in Kering rose 4.8% following the announcement, while L’Oreal gained 1.2%. Analysts at Bernstein noted, “We believe selling Kering Beauté at around the same price paid for Creed two years ago is bitter but necessary medicine.”

The sale is expected to significantly reduce Kering’s net debt, which stood at 9.5 billion euros at the end of June, in addition to 6 billion euros in long-term lease liabilities. Kering had established its beauty division in 2023 following the Creed acquisition, in an effort to reduce reliance on Gucci, which generates the majority of its revenue. 

However, the beauty unit reported a 60 million euro operating loss in the first half of 2025 and struggled to achieve expected growth.

De Meo indicated that further portfolio adjustments could follow, including potential sales of the company’s eyewear division. Speaking to the Financial Times, he said, “You’ll see others,” adding that his focus would be on areas where Kering has “critical size and skills.”

For L’Oreal, the acquisition represents its largest deal to date, surpassing its $2.5 billion purchase of Australian skincare brand Aesop in 2023. The transaction brings the Gucci licence for 50 years into L’Oreal’s portfolio, once the existing agreement with Coty expires in 2028.

Industry observers described the deal as strategically beneficial for L’Oreal, providing access to underdeveloped luxury fragrance brands. 

Bruno-Roland Bernard, a corporate finance and luxury management consultant, said, “It’s possible they are taking advantage of a favourable bargaining position, with limited competition: who has the credentials and the firepower to deal with a Kering under time pressure?”

The sale is expected to close in the first half of 2026. Kering was advised by Evercore and Centerview, while L’Oreal worked with Bank of America and Rothschild.