Kering agrees to sell beauty division to L’Oreal in partnership

Core Viewpoint - Kering SA has agreed to sell its beauty division to L'Oreal SA for €4 billion ($4.7 billion) as part of a strategic alliance aimed at accelerating growth and improving the company's performance in the luxury market [1][2]. Group 1: Strategic Move - The sale marks the first strategic initiative by CEO Luca de Meo, who took over in September, as Kering faces challenges such as declining demand in China and potential higher tariffs in the US [3]. - The partnership with L'Oreal, the largest cosmetics and beauty company globally, is expected to enhance the development of fragrance and cosmetics for Kering's major brands, allowing them to scale and unlock long-term potential [3]. Group 2: Background and Context - Kering launched its beauty division in 2023 and acquired the high-end fragrance brand Creed for approximately €3.5 billion to establish its beauty platform [2]. - The company is currently dealing with significant issues, including a high debt burden that has raised concerns among investors [3]. - The Pinault family, who are the majority shareholders, hold a 42% stake in Kering and 59% of the voting rights, indicating strong control over the company's strategic direction [4].