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L’Oréal has signed an agreement to acquire Aesop, the upscale Australian cosmetics brand known for its hand soaps as well as its amber packaging, the company announced Monday. The deal is valued at $2.525 billion.
Multiple companies showed interest in acquiring Aesop from its current owner, Brazilian cosmetics group Natura & Co. Puig, LVMH and Clarins’s investment arm Famille C have all been reported as potential buyers since Natura first began working with Bank of America and Morgan Stanley to sell off Aesop, which Bloomberg first reported in November. Aesop reported $537 million in sales in 2022. The acquisition is pending regulatory approvals.
“Aesop takes advantage of all current consumer uptrends, and L’Oréal will help accelerate its enormous potential growth, particularly in China and in travel retail,” L’Oréal Group managing director Nicolas Hieronimus said in a statement.
M&A in beauty has shown no signs of letting up in 2023 following several high-profile deals last year, and Aesop’s valuation of $2.5 billion underscores how much companies are willing to pay to stay competitive. It more than doubles Byredo’s purchase price of €1 billion when it went to Puig in June 2022 and comes close to the price tag of the entirety of the Tom Ford business, which will sell to beauty licensee holder Estée Lauder Companies for $2.8 billion pending approvals. Analysts predicted in January that beauty conglomerates, including L’Oréal, Coty and P&G, were likely to be the most competitive acquisition companies in this year’s volatile market.
Aesop has become a recognisable luxury beauty brand, and its vegan formulas and natural ingredients drew L’Oréal to the brand, the company’s press statement reads. It’s sold in 400 retail outlets worldwide with a fledgling business in China and also has deals with luxury hotel chains and beauty centres. Natura & Co took over Aesop in 2013 when it acquired a 65 per cent stake of then-parent company Emeis Holdings. It also owns Avon and The Body Shop, where sales declines have dragged on the business. The company reported a 10.8 per cent drop in revenue in the fourth quarter of 2022 to BRL 10.4 billion ($2 billion).
“The disposal of Aesop marks the start of a new development cycle for Natura & Co. With a strengthened financial structure, a healthy balance sheet and strict financial discipline, Natura & Co will be able to focus more on its strategic priorities, including its investment plan in Latin America,” Natura & Co managing director Fábio Barbosa said in the statement.
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