Deal Marks Strategic Shift Under New CEO Luca de Meo
Gucci owner Kering has agreed to sell its beauty business to L’Oréal for 4 billion euros ($4.66 billion), marking a major strategic pivot under new CEO Luca de Meo. The sale aims to reduce Kering’s high debt load and refocus the luxury group on its core fashion operations.
As part of the deal, L’Oréal will acquire Kering’s fragrance brand Creed—purchased in 2023 for 3.5 billion euros—as well as 50-year exclusive rights to develop fragrance and beauty products under Kering’s fashion labels including Bottega Veneta and Balenciaga. L’Oréal will also gain the Gucci beauty license for the same duration once Kering’s existing deal with Coty expires, which analysts expect to happen in 2028.
“We believe selling Kering Beauté at around the same price paid for Creed two years ago is bitter but necessary medicine,” analysts at Bernstein wrote. The sale discussions reportedly accelerated rapidly this month after de Meo officially assumed leadership in September, according to sources familiar with the negotiations.
L’Oréal’s Largest Acquisition to Date
The purchase of Kering’s beauty division will be L’Oréal’s largest-ever acquisition, surpassing its 2023 purchase of Australian brand Aesop for $2.5 billion. Analysts say the acquisition strengthens L’Oréal’s presence in the fast-growing luxury fragrance segment, with Creed positioned as one of the most dynamic brands in the market.
Following the announcement, shares in Kering rose 4.7% while L’Oréal shares climbed 1.4%.
Debt Reduction and Strategic Realignment
The transaction represents a significant step toward reducing Kering’s net debt, which stood at 9.5 billion euros as of June, alongside 6 billion euros in long-term lease liabilities. The move has been welcomed by investors concerned about the group’s financial leverage.
It also signals a dramatic change in direction under de Meo, coming less than two months after his appointment. The sale effectively unwinds one of the major strategic moves by his predecessor, François-Henri Pinault, who had sought to diversify Kering beyond fashion by building a beauty arm.
Kering created its beauty division in 2023 following the acquisition of Creed, aiming to reduce dependence on Gucci, which still generates the majority of the company’s profits. However, the beauty business has struggled to gain traction, reporting a 60 million euro operating loss in the first half of 2025.
Future Outlook
Industry observers see the sale as both a pragmatic and symbolic reset for Kering. For L’Oréal, the acquisition bolsters its dominance in the high-end fragrance and beauty market and expands its brand portfolio to include some of the most prestigious names in luxury fashion.
The deal, expected to close after regulatory approval, marks a defining moment for both companies—L’Oréal’s biggest investment yet and Kering’s first major move under de Meo to stabilize finances and refocus on its heritage brands.