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Kering is selling Kering Beauté to L’Oréal for €4 billion, the two companies announced on Sunday night, confirming information first reported by The Wall Street Journal on Saturday.
The agreement includes the rights to enter into a 50-year exclusive license for the creation, development and distribution of fragrance and beauty products for Gucci, commencing after expiration of the current license with Coty, and respecting the Kering Group’s obligations as per the existing license agreement.
Kering will also grant L’Oréal 50-year exclusive licenses for the creation, development, and distribution of fragrance and beauty products for Bottega Veneta and Balenciaga, starting upon closing of the announced transaction. L’Oréal will also pay royalties to Kering for the use of its licensed brands.
According to the release, Kering and L’Oréal are also joining forces “to explore business opportunities at the intersection of luxury, wellness, and longevity. This exclusive partnership, in the form of a planned 50/50 joint venture, will craft cutting-edge experiences and services combining L’Oréal’s innovation capabilities with Kering’s deep understanding of luxury clients.”
“This strategic alliance marks a decisive step for Kering,” said Luca de Meo, CEO of Kering. “Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L’Oréal’s stewardship. Together, we will also venture into new frontiers of wellness, combining the unrivalled expertise of L’Oréal with our unique luxury reach. This partnership allows us to focus on what defines us best: the creative power and desirability of our houses.”
“I am delighted to forge this long-term strategic alliance with one of the world’s most prestigious, creative and visionary luxury groups. This partnership will further solidify our position as the world’s #1 luxury beauty company and allow us to explore new avenues in wellness together,” said Nicolas Hieronimus, CEO of L’Oréal Groupe. “The addition of these extraordinary brands perfectly complements our existing portfolio and significantly expands our reach into new, dynamic segments of luxury beauty. Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche fragrance market. Gucci, Bottega Veneta and Balenciaga are all exceptional couture brands with enormous potential for growth.”
Kering Beauté CEO Raffaella Cornaggia and Balenciaga CEO Gianfranco Gianangeli share the strategy.
Kering Beauté was formed by the French group as a separate entity in 2023 under the leadership of previous CEO François-Henri Pinault, who remains chairman of the group, to support its houses in the development of the category. A few months later, Kering acquired 100 per cent of the high-end heritage fragrance house Creed in an all-cash deal that was reportedly valued at €3.5 billion. It launched Bottega Veneta fragrances in October 2024 and Balenciaga fragrances in early September this year. Sales of Kering Beauté in the first half of 2025 were €150 million, up 9 per cent year-on-year, according to the group. This represents a modest scale compared with beauty heavyweights that have firepower in beauty products’ distribution channels.
With this deal, the world’s largest beauty player, L’Oréal, which already owns the beauty license of Kering-owned house Yves Saint Laurent, adds Creed and the licenses of Bottega Veneta and Balenciaga to its portfolio. It also adds the right to enter a licensing agreement with Gucci after its expiration with Coty.
Separately, L’Oréal is among the three companies, alongside LVMH and EssilorLuxottica, that Giorgio Armani cited in his will among potential stakeholders in the business. When details on the will emerged on 12 September, L’Oréal said that it would give the idea careful thought. Proceeding with Armani after Kering Beauté would highlight the group’s solid balance sheet and strong M&A firepower.
For Kering, this marks a major shift in its strategy, driven by de Meo, who became CEO a little over a month ago. Among his early decisions was reshuffling the group’s leadership, notably the elimination of the two deputy CEO roles. Francesca Bellettini was appointed president and CEO of Gucci, and Jean-Marc Duplaix was appointed COO of Kering.
Under the new terms, Kering has the option to acquire 100 per cent of the share capital of Valentino no later than 2029.
Reducing the debt of the group is high on de Meo’s agenda. Kering and Mayhoola announced on 10 September the plan to postpone Kering fully acquiring Valentino. (At the end of 2024, Kering had estimated the valuation of the remaining stake of Valentino at around €4 billion.) The rationale was to pay off the debt issue before moving forward with the acquisition. Kering’s debt has ballooned to reach €9.5 billion by the end of the first half of 2025.
“This long-term partnership will allow L’Oréal to strengthen its luxury offer and Kering to have increasing royalties flows without the need of investments for building a structure for the beauty business or expensive acquisitions like in the case of Creed," says Mario Ortelli, partner at Ortelli Co.
Bernstein managing director Luca Solca expects the market to “take well the U-turn on in-housing beauty”. He says, “A high-profile license with L’Oréal promises to bring material royalty flows and limit future capex in the beauty area, where Kering has no credible competitive advantage. Besides, the collaboration with L’Oréal and Saint Laurent has worked very well.”
The closing is expected in the first half of 2026.
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