L’Oréal completes acquisition of Kering Beauté to expand luxe and fragrance

L’Oréal has completed its acquisition of Kering Beauté. The deal includes House of Creed, which L’Oréal calls one of the world’s foremost luxury fragrance houses. The acquisition will also feature the signing of 50-year exclusive licenses for the creation, development, and distribution of fragrance and beauty products under Bottega Veneta and Balenciaga. 

The right to secure a 50-year exclusive license agreement for the Gucci brand will take effect once the current license agreement with Coty ends. The move follows the rules set by Kering Group’s existing licensing agreement. 

The acquisition marks L’Oréal’s largest to date, surpassing the 2023 purchase of Aesop for US$2.5 billion.

Nicolas Hieronimus, CEO of L’Oréal, says: “This significant new milestone in our strategic partnership with Kering reinforces our position as the world’s number one in both beauty and luxury beauty. We will now work together, over the next 50 years, to write the next chapter of these iconic brands, to unlock their immense growth potential.”

The acquisition terms are in accordance with the deal announced in October 2025.

Alongside the finalized agreement, L’Oréal and Kering are exploring development opportunities in the fields of wellness and longevity through a joint venture.

Financial fallings and beauty boosts

The sale may ignite a U-turn for Kering, which established its in-house beauty division two years ago and bought high-end fragrance company House of Creed for €3.5 billion (US$4.1 billion) to diversify beyond fashion. 

However, declining first-quarter fashion sales last year at Gucci and Saint Laurent, coupled with a net debt of €9.5 billion (US$11.1 billion) as of June 2025, prompted Kering to revise and stabilize its balance sheet.L’Oréal expands its luxury fragrance portfolio with the acquisition of Kering Beauté. 

Kering Beauté was one of the few bright spots. The unit grew 9% in H1 2025, reaching €150 million (US$171 million) in sales, driven primarily by Creed’s performance. The company attributed its growth to women’s fragrances and described beauty as a “strategic investment area” with significant long-term potential.

L’Oréal expects the acquisition to elevate its Luxe division and says it reinforces its ambition to become the top destination for aspirational luxury beauty experiences worldwide.

“This acquisition marks a defining milestone for L’Oréal Luxe. By bringing these iconic houses into our portfolio, we are uniting around the very essence of luxury: bold creativity, exceptional craftsmanship, and a forward-looking vision of beauty,” says Cyril Chapuy, president of L’Oréal Luxe. 

Last month, Kering reported a 13% decline in revenue for its full-year 2025 results. The fall reflects a challenging year for the company, as its performance was dragged down by a disappointing Q4 amid ongoing restructuring efforts — including the significant shift in its beauty division. 

The French luxury group behind Gucci and Yves Saint Laurent reported total sales of €14.7 billion (US$17.46 billion) last year. Kering’s 2025 revenue decreased 10% on a comparable basis. Sales from its directly operated retail network, which includes both physical stores and e-commerce, fell by 11%. 

The company’s fourth-quarter performance showed no signs of recovery, with revenue down 9% as reported and 3% on a comparable basis.

Fragrance business moves

The fragrance industry is experiencing major industry player acquisitions and potential mergers. Recent business moves, and talks of them, signal a growing consolidation trend, as beauty giants seek to strengthen their positions in the competitive fragrance market. Companies are looking to combine expertise and resources to unlock new growth opportunities and solidify their leadership in the luxury beauty sector. The Kering Beauté acquisition marks L’Oréal’s largest deal to date. 

Last week, the Estée Lauder Companies confirmed that it is in talks with Spanish beauty group Puig about a potential business merger that would bring major fragrance and beauty brands, including Tom Ford, Rabanne, and Clinique, under one company. 

The potential deal could create a luxury beauty group valued at around US$40 billion, and may strengthen both companies’ position in the global fragrance market, which has seen heightened investment from global giants such as L’Oréal.

Luca de Meo, CEO of Kering, says: “By leveraging L’Oréal’s expertise in the beauty sector, we are opening a new phase of acceleration for the development of fragrances and cosmetics for our Houses, among the most iconic in the world. This long-term partnership will enable us to fully realize their potential in this category and support their development, drawing on the creativity, desirability, and excellence that set them apart.”