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Estee Lauder Companies acquires Tom Ford brand in $2.8 billion deal

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After months of speculation, Estee Lauder Companies Inc. (ELC) announced Tuesday that it has closed a deal to acquire the Tom Ford brand for $2.3 billion.

In a deal that valued the Tom Ford brand at $2.8 billion, ELC beat rival Kering, which was reported earlier this month as the company’s front-runner.

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According to the ELC, it expects to fund this transaction through a combination of cash, debt and deferred payments of up to $300 million to sellers, beginning in July 2025.

The deal will make ELC the sole owner of the Tom Ford brand and all of its intellectual property.

Under the terms of the agreement, Tom Ford, founder and CEO of Tom Ford International, will continue to serve as the brand’s creative visionary after its closure and through the end of calendar year 2023. Domenico De Sole, president of Tom Ford International, will continue to . At the same time as an advisor.

The deal will extend and expand the Tom Ford brand’s long-standing relationship with Ermenegildo Zegna, including a long-term license for all men’s and women’s fashion, accessories and underwear. As part of this transaction, Zegna will acquire the Tom Ford fashion business operations necessary to meet its obligations as a licensee. ELC and Zegna will closely align their creative direction to build on the luxury positioning of the Tom Ford brand.

The brand’s existing license with global eyewear manufacturer Marcolin will also be significantly expanded.

In a statement on Tuesday, Mr Ford said he “couldn’t be happier” with the acquisition, adding that the Estee Lauder company is the “ideal home” for the brand.

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“she [ELC] I’ve been an extraordinary partner since day one of the company’s inception, and I’m thrilled to have him as a luxury steward in this next chapter of the Tom Ford brand. “Ermenegildo Zegna and Marcolin have been great partners for a long time and I am pleased to continue the great relationship they have built over the last 16 years. With their full commitment, I am confident that they will continue to drive the future of the brand as a luxury company.” which strives to produce only the highest quality fashion and eyewear.

Estee Lauder Companies Inc. began his working relationship with Tom Ford in 2006 as a licensee of the brand’s Tom Ford Beauty line of fragrances, makeup and skin care. According to ELC, this strategic acquisition supports the next level of growth for Tom Ford Beauty in key luxury and online channel markets worldwide.

The beauty line has delivered “impressive success,” said ELC, including strong double-digit net sales growth on a compound annual basis from fiscal year 2012 to 2022. In ELC’s fiscal year 2022, Tom Ford Beauty achieved net sales growth of nearly 25% compared to ten Relative to the previous year and for years to come, the brand is expected to reach $1 billion in annual net sales.

“As a private brand, this strategic acquisition will open new opportunities and strengthen our growth plans for Tom Ford Beauty,” said Fabrizio Freda, President and CEO of The Estée Lauder Companies, in a statement. “It will also help us increase our momentum in the high-potential luxury beauty category for the long term, reaffirming our commitment to be the leading pure player in global prestige beauty.”

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The acquisition is Lauder’s largest to date, following an agreement to pay the company $2.2 billion for a majority stake in Decim in 2021. The deal also marks the company’s first foray into fashion.

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