Estee Lauder is in discussions to combine with Spain’s Puig in a potential deal that would create a US$40 billion luxury beauty powerhouse and reshape the global fragrance market, Reuters reported.
The negotiations, confirmed by both companies on March 23, could bring major brands including Tom Ford, Carolina Herrera, Rabanne and Clinique under one roof, strengthening their position against industry leader L’Oréal.
A tie-up would come amid intensifying consolidation in the beauty sector, following L’Oréal’s recent US$4.7 billion acquisition of Kering’s beauty business, which expanded its already dominant perfume portfolio.
For Estee Lauder, the deal could accelerate its turnaround efforts as it grapples with weak US demand. The company recently issued a softer-than-expected outlook, with sluggish sales in the Americas offsetting improvements in China and Europe. Its shares fell more than 7% on the news.
Puig, valued at over US$10 billion and heavily exposed to fragrances, which account for more than 70% of its revenue, would bolster Estee’s fast-growing perfume segment, a key focus area driven by strong Gen Z demand.
However, slowing growth in the fragrance category following a post-pandemic boom could complicate the outlook for the combined entity.
The companies are reportedly exploring a mix of cash and stock for the transaction, though no agreement has been reached and there is no certainty a deal will materialise.
If completed, the merger would create a formidable challenger in the global beauty industry, as players race to scale up and compete in an increasingly crowded and cooling fragrance market.
