Estée Lauder has ended merger talks with its Spanish rival Puig, a move that would have created a fashion and beauty group worth nearly $40 billion. The US cosmetics giant, owner of brands such as Clinique, Bobbi Brown, and Tom Ford Beauty, announced on Thursday that discussions regarding a potential business combination had been terminated.
Key Sticking Points in the Negotiations
The talks, first reported in March, stalled over disagreements about the structure of the merged entity. A major obstacle was the level of compensation demanded by Charlotte Tilbury, the British beauty entrepreneur who founded her eponymous brand in 2013. Puig acquired a majority stake in Tilbury's brand in 2020 for a reported $1.2 billion, with plans to take full ownership by 2031. The deal with Estée Lauder would have triggered a change of control clause, potentially allowing Tilbury to sell her stake, a prospect that became a significant stumbling block.
Investor Reaction
The talks were unpopular with Estée Lauder investors, whose market value fell by about a fifth after the discussions became public. Shares climbed by 11.5% in post-market trading on Thursday as investors welcomed the termination. Estée Lauder CEO Stéphane de La Faverie expressed gratitude for the conversations and reaffirmed confidence in the company's standalone strength.
Puig, which floated on the Madrid stock market in 2024, owns labels including Jean Paul Gaultier, Carolina Herrera, and Dries van Noten. Its shares rose 15% when the potential merger was announced but plunged by the same amount after the talks ended. The Puig family, which founded the business 110 years ago, retains most voting rights.
Future Strategy
Puig CEO José Manuel Albesa stated that the decision does not alter the company's strategic roadmap, emphasizing a selective and value-focused approach to mergers and acquisitions. Puig completed 11 deals between 2011 and 2024 to acquire fragrance and fashion brands. Charlotte Tilbury, who topped the Sunday Times beauty rich list with an estimated fortune of £350 million, was approached for comment but did not respond.
