L’Oréal acquires Cult Skincare Company Aesop for $2.5 billion

L’Oréal, the luxury cosmetics group, has announced that it will acquire Aesop, the Melbourne-based luxury skincare company, from Natura & Co with a proposed transaction value of more than US$2.5 billion. The transaction is expected to close in the third quarter of 2023 and will also be Australia’s largest luxury purchase.

In a statement by Nicholas Hieronymus, CEO of L’Oréal, “Aesop is the epitome of avant-garde beauty, whose products are not only made with meticulous care and exceptional attention to detail; they are a wonderful blend of urbanity, hedonism and undeniable luxury.”

“Aesop is tapping into all of today’s ups and downs, and L’Oréal will help unlock its huge growth potential, particularly in China and the travel retail business.”

Once the acquisition receives regulatory approvals, Aesop will join the L’Oréal Luxe division, which also includes other brands such as Lancôme, Yves Saint Laurent, Helena Rubinstein, Kiehl’s, and Mugler.

“Aesop enjoys a very unique position in the global luxury cosmetics market thanks to its design-led brand essence, highly effective and sensual products, as well as its customer-obsessed retail philosophy,” said Cyril Chappuis, President, L’Oréal Luxe. .

He continued, “We look forward to welcoming Aesop CEO Michael O’Keefe and his experienced and passionate teams to continue growing the great brand’s potential together, by continuing to grow its uniqueness and values.” “We have great confidence that Aesop will join the L’Oréal Luxe Billionaire club of brands, thus making a significant contribution to the division’s growth in the coming years.”

Founded by hairstylist Dennis Paphitis in 1987, the brand began with hair care products due to the founder’s frustration with what was being offered in the market at the time. Over the years, he has slowly expanded the product range to include skin, body, and most recently fragrances in 2022. The brand has nearly 400 stores and counters in 27 markets, and total sales increased to US$537 million in 2022.

Aesop’s parent company first bought a 65 percent stake in the brand in 2012 for US$68 million, and by the end of the year had bought over the remaining 35 percent. Under Natura & Co, it became the most profitable brand despite being one of the smallest companies in the group. Known for having amassed a cult following for its minimal aesthetic and strong focus on plant-based ingredients and sustainable plant-based formulas, Aesop is Natura & Co.’s crowning glory.

While that is the case for Aesop, Natura & Co CEO Fabio Barbosa said the decision to divest would “bolster its financial leverage and focus on strategic priorities such as the integration of its operations in Latin America,” as reported by Reuters. The group will also refocus on improving its operations at Avon International and The Body Shop, which is owned by Natura & Co. currently.

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