The Estee Lauder Cos. acquires luxury powerhouse Tom Ford in a deal valued at $2.8 billion, marking the beauty company’s biggest acquisition to date.
As part of the agreement announced on Tuesday, Ermenegildo Zegna Group and Marcolin SpA will enter into long-term licensing agreements for Tom Ford fashion and Tom Ford eyewear, respectively.
While Estee Lauder said the deal values the total business at $2.8 billion, the New York-based beauty company is expected to pay around $2.3 billion, following a $250 million payout. from Italian eyewear manufacturer Marcolin SpA.
The purchase, subject to regulatory approvals, is expected to be finalized in the first half of 2023.
Under the agreement, Tom Ford, founder and CEO of Tom Ford International, will remain the brand’s creative visionary until the end of 2023. Domenico De Sole, president of Tom Ford International, will remain as a consultant until this same date.
Estee Lauder launched its Tom Ford Beauty line in 2006. In Estee Lauder’s fiscal year that ended June 30, the brand’s net sales increased nearly 25% over the last year. The beauty company said that over the next few years, it expects the beauty line to generate $1 billion in net sales.
“This strategic acquisition will unlock new opportunities and strengthen our growth plans for Tom Ford Beauty,” said Fabrizio Freda, President and CEO of Estee Lauder in a statement. “It will also help propel our momentum into the promising long-term luxury beauty category, while reaffirming our commitment to be the premier pure player in global prestige beauty.”
Estee Lauder said it aims to fund the acquisition with a combination of cash, debt and $300 million in deferred vendor payments that become due beginning in July 2025.