- Kering is selling its entire L'Oréal cosmetics division for €4 billion, including the Creed brand and 50-year licenses for cosmetics and fragrances for Gucci, Bottega Veneta, Balenciaga, and Alexander McQueen.
- For L'Oréal, this is the largest acquisition in its history, strengthening its position in the luxury perfume segment
- Kering shares gained 4.7% after the sale was announced, as investors appreciate the improvement in liquidity and the avoidance of further credit rating downgrades
- Kering is selling its entire L'Oréal cosmetics division for €4 billion, including the Creed brand and 50-year licenses for cosmetics and fragrances for Gucci, Bottega Veneta, Balenciaga, and Alexander McQueen.
- For L'Oréal, this is the largest acquisition in its history, strengthening its position in the luxury perfume segment
- Kering shares gained 4.7% after the sale was announced, as investors appreciate the improvement in liquidity and the avoidance of further credit rating downgrades
French luxury goods group Kering (KER.FR), owner of Gucci, Bottega Veneta, Balenciaga, and Alexander McQueen, has made one of its most important strategic moves in recent years. The company has agreed to sell its entire cosmetics division to L'Oréal (OR.FR) for €4 billion. The transaction includes the renowned Creed perfume brand and 50-year exclusive licenses to develop cosmetics and fragrances for Kering's key fashion brands – Gucci, Bottega Veneta, Balenciaga, and Alexander McQueen.
This is a key step in the strategy of new CEO Luca de Meo, who took the helm at Kering just a month ago, in mid-September 2025. De Meo, known for his success in managing Renault, is accelerating the restructuring of the debt-ridden fashion giant. The sale of the cosmetics division also marks a reversal of one of the biggest initiatives of former CEO François-Henri Pinault, who paid €3.5 billion for Creed in 2023 in an attempt to diversify the business and reduce its dependence on Gucci's declining revenues.
Why is Kering selling its cosmetics division?
Kering has been struggling with serious financial problems for several years. At the end of June 2025, the group's net debt amounted to €9.5 billion, plus €6 billion in long-term lease liabilities. The company is losing value – its market capitalization has halved over the past two years, currently standing at less than €40 billion. The main culprit? Weakening demand for Gucci products, which generate most of Kering's profits. Gucci's revenues fell by 25% year-on-year in the last reported quarter, putting pressure on the company to reduce its debt and avoid further credit rating downgrades.
The cosmetics division, created just two years ago, proved to be a disappointment, posting an operating loss of €60 million in the first half of 2025. Faced with falling demand in China, a key market for luxury goods, selling the cosmetics division for almost the same amount that Kering paid for Creed is a bitter but necessary decision.
Kering's breakdown by segment and revenue generated. Source: Kering, H1 report
What does L'Oréal gain?
For L'Oréal, this transaction is the largest acquisition in the company's history, surpassing the purchase of the Australian brand Aesop for $2.5 billion in 2023. The cosmetics group, which has recently recorded record growth in market value (currently over €210 billion, an increase of one-third in recent years), is strengthening its position in the luxury perfume and cosmetics market.
L'Oréal will acquire not only Creed, one of the fastest-growing brands in the niche perfume segment, but also 50 years of exclusive rights to create and distribute products for Kering's prestigious brands. Of particular importance is the Gucci license, which will begin after the current agreement with Coty expires (analysts expect this to happen in 2028). L'Oréal has already enjoyed success with the Yves Saint Laurent license, acquired from Kering in 2008 for €1.15 billion, confirming the potential of such alliances.
L'Oréal's fragrance segment grew at a double-digit rate in the second quarter of 2025, outperforming other product categories, even though it accounts for only 14% of the group's revenue. The addition of Creed and Kering's fashion brand licenses could significantly increase the luxury segment's share of L'Oréal's revenue and attract new affluent customers.
Market reaction and outlook for shares
Kering shares rose 4.7% following the announcement of the transaction, showing that investors view the move to reduce debt and return to core fashion operations positively. The proceeds from the transaction (€4 billion in cash upon completion, expected in the first half of 2026) will significantly improve the company's balance sheet and help avoid further credit rating downgrades.
L'Oréal also benefited from the announcement, with its shares rising 1.4%, reflecting optimism about synergies and long-term growth potential in the luxury segment.
An additional dimension: a joint venture in wellness
The transaction goes beyond a traditional asset sale, with both companies announcing the creation of a 50/50 joint venture to explore new business opportunities at the intersection of luxury, wellness, and longevity. This innovative approach aims to combine L'Oréal's expertise in cosmetic innovation with Kering's deep understanding of luxury customers.
Kering (KER.FR) shares are up nearly 5% today, but in the longer term, they continue their most dynamic rebound since 2022 after an almost dramatic sell-off that pushed the former fashion giant's shares down to 2016 levels. Source: xStation
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