Four months after Bloomberg indicated designer Tom Ford had enlisted Goldman Sachs for the potential sale of his eponymous brand, cosmetic giant Estée Lauder has announced it’ll acquire the latter in a deal valued at approximately US$2.8 billion (AU$4.15 billion) – the luxury industry’s largest in 2022.
“Estée Lauder is expected to pay roughly $2.3 billion, net of a $250 million payment from Italian eyewear manufacturer Marcolin SpA, which has its own licensing deal with Tom Ford,” explains Lauren Thomas of The Wall Street Journal.
“It plans to fund the transaction through a combination of cash, debt, and $300 million in deferred payments to sellers that become due beginning in July 2025.”
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The talented Mr Ford – who can now add “billionaire” to his growing multihyphenate title in addition to Academy Award-nominated film director, art collector, and of course, fashion icon – will reportedly remain with the brand until the end of 2023, although his role beyond that point has not yet been specified. Regardless, as you can imagine, he “could not be happier.”
“They have been an extraordinary partner from the first day of my creation of the company and I am thrilled to see them become the luxury stewards in this next chapter of the Tom Ford brand,” said Ford, in reference to the longstanding licensing agreement between his famed creation and Estée Lauder.
In light of LVMH’s relatively recent shopping spree, many suspected Bernard Arnault would welcome the Madison Avenue company into his prolific conglomerate a la Tiffany & Co. The real frontrunners, however, turned out to be Gucci owner Kering SA as well as Tom Ford’s newly confirmed custodian.
“We are incredibly proud of the success Tom Ford Beauty has achieved in luxury fragrance and makeup,” said Fabrizio Freda, CEO of Estée Lauder.
“And its dedication to creating desirable, high-quality products for discerning consumers around the world.”
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According to Morningstar Research’s David Swartz, in spite of inflation curbing everyday spending, higher-end goods tend to be immune “unless a prolonged bear market hits the wealthy.” Hence why the sale of luxury goods has been able to surge during the pandemic; and why acquisitions of this nature are still possible.
“The reality is that we’ve been in a bull market until really recently and wealthy people are generally in better shape even with the market downturn,” David Swartz told Bloomberg.
“I don’t hear a lot of concerns about luxury consumption.”
But as macroeconomic trends begin to impact both manufacturing and logistics, and a key market in China continues to face lockdowns thereby curtailing growth, now seems like the perfect time for Tom Ford to cash out.
The acquisition, which is currently still subject to regulatory approvals, is expected to close in H1 of 2023.
