Estée Lauder Companies agreed to buy Tom Ford for $2.8 billion USD, its largest-ever transaction. Estée Lauder now owns the valuable licencing agreement that has allowed the company to sell Tom Ford’s fragrance and beauty lines for nearly two decades.

Credit: Vogue Business

Tom Ford is best known for its menswear, though it also sells womenswear and accessories. This, as well as a fast-growing, high-end line of cosmetics and fragrances. Tom Ford’s beauty business is an ultra-prestige brand. Now, as we near the end of 2022, Estée Lauder has reported its largest-ever transaction. The purchase of Tom Ford.

Per Bloomberg, “Estée Lauder will pay about $2.3 billion for the brand [Tom Ford] and all its intellectual property, funded by cash, debt and $300 million in deferred payments, while $250 million will come from eyeware manufacturer Marcolin SpA, whose existing license with Tom Ford will be extended, according to a statement Tuesday.”

Estèe Lauder’s Recent Acquisitions

Credit: Tom Ford

According to Wall Street Journal, in recent years, Estee Lauder has been actively acquiring companies under its authority. In 2021 it paid around $1 billion to buy the rest of the Canadian beauty company, Deciem Inc., and Korean skin-care company Have & Be Co. in 2019.

A few years before, it paid around $1.5 billion for Too Faced Cosmetics LLC. The move to purchase Tom Ford has the potential to help the MAC lipstick manufacturer to strengthen its luxury business; which already houses a huge catalogue of high-end fragrances and skincare products.

Estèe Lauder has less experience in the clothing section. But the new takeover allows the company to seek out new categories; to compete more closely with fashion houses like LVMH. Following the deal, Estée Lauder expects to benefit largely from the Tom Ford fashion and eyewear range.

Ford is set to continue his creative role a the company until the end of 2023.

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