L'Oreal(US:LRLCY) Mei Ri Jing Ji Xin Wen·2025-10-20 11:58Core Viewpoint - Kering Group announced a significant transaction with L'Oréal Group, involving the sale of its fragrance and beauty division for a total of €4 billion (approximately ¥33.2 billion), which includes the acquisition of the Creed brand and a 50-year exclusive licensing agreement for several luxury brands [1][6]. Group 1: Transaction Details - The agreement allows L'Oréal to acquire the Creed brand and obtain exclusive rights to develop, produce, and distribute beauty products for Gucci, Bottega Veneta, and Balenciaga [1][6]. - The transaction is expected to be completed in the first half of 2026 and will be paid in cash [1][6]. - Kering's beauty division, which was established in 2023, has shown high growth potential, making the sale surprising to industry experts [2][9]. Group 2: Financial Implications - The sale is seen as a way to alleviate Kering's financial pressure, especially as the company has faced declining revenues, with a 15% drop in Q2 revenue to €3.7 billion [7][9]. - Kering's beauty division generated €323 million in revenue in 2024, primarily from Creed, indicating its importance to the group's overall performance [3][9]. - The sale may provide Kering with more resources to focus on its core brands, particularly Gucci, which has been experiencing a decline in sales [7][9]. Group 3: Market Reactions and Future Outlook - Industry experts express skepticism about the sale, suggesting it may hinder Kering's diversification strategy and limit future growth opportunities in the luxury market [2][9]. - The acquisition price of €4 billion is considered high for a company and brands that are perceived to be past their peak, raising concerns about the long-term value of the investment for L'Oréal [6][10]. - The sale will also impact Coty Group, which currently holds the licensing rights for Gucci beauty products until 2028, potentially leading to strategic shifts for Coty following the loss of this key brand [11][14].