The Estée Lauder Companies (ELC) announced on November 15 it has signed an agreement to acquire the Tom Ford brand, which it described as a global leader in luxury.
The “transformational” deal will establish ELC, a long-standing beauty sector partner of Tom Ford, as the sole owner of both the brand and all its intellectual property.
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“Under the stewardship of ELC, the purchase of the Tom Ford brand and the extension of its current licensing partners will allow for continuity and the further evolution of the Tom Ford brand as one of the preeminent global luxury brands of the twenty-first century,” said the cosmetics giant in a statement.
Marcolin and Zegna licensing deals in eyewear and fashion extended
The deal values the total enterprise at USD 2.8 billion. ELC will pay some USD 2.3 billion for the acquisition, net of a USD 250 million payment to ELC at closing from eyewear manufacturer Marcolin. Tom Ford’s current license with Marcolin will also be substantially extended. ELC expects to fund this transaction through a combination of cash, debt and USD 300 million in deferred payments to the sellers that become due beginning in July 2025.
The deal will also extend and expand the Tom Ford brand’s long-standing relationship with Ermenegildo Zegna to include a long-term license for all men’s and women’s fashion, as well as accessories and underwear.
As part of this transaction, Zegna will acquire operations of the Tom Ford fashion business necessary to perform its obligations as licensee. ELC and Zegna will align closely on the creative direction to continue building on the luxury positioning of the Tom Ford brand.
“We are incredibly proud of the success Tom Ford Beauty has achieved in luxury fragrance and makeup and its dedication to creating desirable, high-quality products for discerning consumers around the world,” said The Estée Lauder Companies President and Chief Executive Officer, Fabrizio Freda.
“As an owned brand, this strategic acquisition will unlock new opportunities and fortify our growth plans for Tom Ford Beauty. It will also further help to propel our momentum in the promising category of luxury beauty for the long term, while reaffirming our commitment to being the leading pure player in global prestige beauty.”
Under the agreement, Tom Ford, founder and CEO of Tom Ford International, will continue to serve as the brand’s creative visionary after closing and through the end of calendar 2023. Tom Ford International Chairman, Domenico De Sole, will stay on as a consultant until that same time.
ELC’s benefits include securing the long-term cash flow from owning the fast-growing Tom Ford beauty brand beyond the existing license expiration in 2030 and the elimination of royalty payments on beauty upon closing, as well as new licensing revenue streams and other anticipated synergies.
These synergies include creative oversight, increased speed and agility, and opportunities for further online penetration. ELC expects the transaction to be dilutive to adjusted diluted earnings per share (EPS) in fiscal 2023 by (USD 0.05) to (USD 0.15), primarily from one time acquisition-related costs.
For fiscal 2024, the transaction is anticipated to be roughly neutral to adjusted diluted EPS. The acquisition is subject to certain conditions, including regulatory approvals, and is expected to close in the first half of calendar 2023.
“I could not be happier with this acquisition as The Estée Lauder Companies is the ideal home for the brand. They have been an extraordinary partner from the first day of my creation of the company and I am thrilled to see them become the luxury stewards in this next chapter of the Tom Ford brand,” said Tom Ford.
“Ermenegildo Zegna and Marcolin have been spectacular long-standing partners as well and I am happy to see the preservation of the great relationship that we have built over the past 16 years. With their full commitment, I trust they will continue the brand’s future as a luxury company that strives to produce only the highest quality fashion and eyewear.”
Source: The Moodie Davitt Report