US cosmetics giant Estée Lauder is in talks over a merger with Puig, the Spanish company which owns major global brands including Rabanne, Charlotte Tilbury and Jean Paul Gaultier. The Guardian reports that the resulting company could be worth $40 billion.
The brands have confirmed that they are holding discussions over a possible “business combination”, according to the Guardian, but no further details are currently available.
Estée Lauder is one of the world’s leading manufacturers of skin care, make-up and fragrances, owning brands such as Clinique, Bobbi Brown and Tom Ford. It is currently in turnaround mode following a 80% share price decline from its 2021 peak. The company has experienced sharp revenue drops due to weakened demand in China – previously a major market for the brand – and over-reliance on travel retail, according to analysts. This led to the announcement of a major restructuring programme in 2024 that aimed to reset the company’s structure around North America and APAC.
It makes sense – but questions remain
The Guardian reports that Puig has also struggled in recent years, with its shares falling nearly 30% since its 2024 public listing, when the company was valued at €13.9bn. However, shares in the company climbed 15% on Tuesday, when the possible deal with Estée Lauder was made public, reflecting investor confidence in the prospect. Conversely, shares in Estée Lauder fell by 9% – which Louise Mahon, corporate partner at national law firm Freeths, suggests reflects “questions” around the possible merger.
“A tie-up between Estée Lauder and Puig makes clear strategic sense on paper, particularly in strengthening Estée Lauder’s position in fragrance and broadening its global footprint,” she said. “But doing a deal of this scale in the middle of a turnaround inevitably raises questions. The market reaction suggests investors are more focused on execution risk than strategic fit, and that’s where the real challenge will sit.”
A merger between Estée Lauder and Puig would create one of the world’s most powerful beauty groups, but with both companies navigating their own financial headwinds, the road to a deal is far from straightforward. Investor reactions show that while the strategic logic is clear, confidence in successful execution is less certain – making this potential tie‑up one to watch closely in the months ahead.
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