L’Oreal, the French cosmetics group, has acquired Aesop, an Australian luxury brand, for an enterprise value of $2.53 billion, according to an announcement made on Monday.
This deal marks a significant financial relief for the Brazilian firm, Natura & Co, which has been struggling with shrinking margins and heavy debt.
Aesop, which is Natura’s most profitable brand, has nearly 400 stores and generated $537 million in sales in 2022, representing a 21% growth in constant currency from the previous year.
The luxury brand reported double-digit growth in all regions in the past year and exceeded expectations with its strong performance in the Chinese market.
The acquisition is expected to help L’Oreal expand its presence in the luxury cosmetics market while unleashing Aesop’s growth potential, particularly in China and travel retail, according to L’Oreal CEO Nicolas Hieronimus.
The acquisition of Aesop by L’Oreal from Natura & Co will provide Natura with financial relief and an opportunity to focus on strategic priorities. This comes in the context of a broader organizational shakeup, which saw Fabio Barbosa taking over the reins from Roberto Marques, who stepped down as the CEO and executive chairman in June last year.
The sale of Aesop is expected to help Natura achieve financial deleverage and concentrate on other strategic priorities, such as integrating its Latin America operations, optimizing Avon International’s footprint, and improving The Body Shop’s business.
Natura & Co sells Aesop to L’Oreal
The acquisition of Aesop is subject to regulatory approvals and is expected to be paid in cash at the closing date, which is anticipated in the third quarter of 2023, according to Natura.
As for L’Oreal, the deal expands the company’s presence in the luxury cosmetics market, and the acquisition of Aesop is expected to unleash massive growth potential, particularly in China and travel retail.
L’Oreal CEO Nicolas Hieronimus expressed confidence in Aesop’s prospects, noting that the brand taps into current trends and is poised for significant growth, while L’Oreal’s contribution is expected to unlock its full potential.
The purchase of Aesop will add to L’Oreal’s already impressive luxury brand portfolio, which includes Lancome, Yves Saint Laurent, Giorgio Armani, and Kiehl’s, among others.
The move comes as L’Oreal looks to strengthen its position in the growing luxury cosmetics market, which is expected to see significant growth in the coming years.
The acquisition of Aesop will help L’Oreal capture the upscale market by providing a complementary product offering and a new customer base.
Moreover, Aesop’s strong foothold in the Chinese market is expected to enhance L’Oreal’s growth prospects in the region, where the demand for high-end beauty products is rapidly increasing.