Estée Lauder has confirmed it is in talks to merge with Puig, the Barcelona-based group behind Charlotte Tilbury, Jean Paul Gaultier and Rabanne, in a transaction that would create a combined entity valued at roughly $40bn.
The deal, first reported by the Financial Times and Wall Street Journal on Monday evening, would be one of the largest transactions in the beauty sector in years. Estée Lauder's portfolio spans Clinique, Bobbi Brown and Tom Ford Beauty; Puig adds a strong fragrance and premium fashion-adjacent book to that stable.
The market reaction split sharply along the lines of who would be paying. Puig shares soared as much as 15% in Madrid trading on Tuesday, while Estée Lauder shares declined in New York, according to Bloomberg. That divergence signals that investors regard the terms as likely to favour Puig shareholders, or at minimum that they are sceptical of the strategic rationale given Estée Lauder's unfinished internal recovery.
Estée Lauder has been executing a cost-reduction programme after a prolonged revenue shortfall tied to weak demand in China and a loss of market share in prestige skincare. The company, whose market capitalisation has fallen sharply from its 2021 peak, is led by chief executive Stéphane de La Faverie, who took the role earlier this year.
Talks are ongoing and no agreement has been reached. The structure of any potential combination — whether a full acquisition, merger of equals, or another form — has not been disclosed.
