L’Oréal’s Largest Acquisition Ever! Kering Sells Beauty Unit, Easing Debt Pressure

TradingKey - Luxury giant Kering has announced it will sell its beauty business to French cosmetics leader L’Oréal for approximately €4 billion.

This deal marks the largest acquisition in L’Oréal’s history and signals the beginning of a strategic overhaul under Kering’s new CEO, Luca de Meo, who took office earlier this year.

The transaction includes the prestigious fragrance brand Creed, as well as long-term licenses for perfumes and beauty products from Kering’s fashion houses — including Gucci, Bottega Veneta, and Balenciaga — replacing the current agreements held by Coty Inc. Upon completion, L’Oréal will gain exclusive rights to develop and distribute these brands’ beauty lines for up to 50 years.

Kering only established its beauty division after acquiring Creed for €3.5 billion last year, aiming to reduce its heavy reliance on Gucci. However, the unit has remained unprofitable, reporting an operating loss of €60 million in the first half of this year. At the same time, the group carries a net debt of €9.5 billion, plus €6 billion in lease liabilities, raising concerns about its credit profile.

Market analysts say that returning to a licensing model will significantly reduce capital intensity, improve profitability, and free up cash flow for Kering’s core fashion and soft luxury businesses. De Meo’s swift move — just two months into his tenure — underscores his determination to cut debt. The group has already postponed plans to acquire Valentino and is considering selling some real estate assets.

For L’Oréal, the acquisition strengthens its dominance in the luxury fragrance market and extends its longstanding partnership with Kering. Industry sources expect the deal to close in the first half of 2026.