L’Oreal is set to pay a staggering $US2.53 billion ($3.7 billion) to purchase Aesop. And it’s a big deal. In fact, it’s one of the biggest premium brand acquisitions in Australian history.

Credit: Sydney Morning Herald

Beauty giant L’Oreal bought luxury cosmetics company Aesop this week, from Brazilian owner Natura & Co Holding. The move is part of a larger reorganisation undertaken by Fabio Barbosa – who took over as CEO of Natura & Co last year.

Brazilian cosmetics powerhouse Natura & Co bought a 66% share of the company in 2012 for $US71.6 million. After becoming part of the Brazilian cosmetics powerhouse, Aesop recorded spectacular growth. In the decade following, Aesop’s sales increased from $41 million to $790 million.

By December 2016, their share in the company increased to 100%. The number of stores and counters increased from 52 to 395 as Aesop expanded its global footprint from eight countries to 29.

The Aesop Story

Aesop founder Dennis Paphitis | Credit: The Sydney Morning Herald

Melbourne Hairdresser Dennis Paphitis is the brains behind the brand. He created Aesop in 1987, after becoming fed up with the quality of haircare products on the market. Because of this, he began expertly combining essential oils -and the rest is history. He quickly progressed to skincare, before leaving his salon to focus on his booming cosmetics company.

Natura & Co purchased a 66% stake in the firm for $US71.6 million in 2012 and increased it to 100% in December 2016. This is when Founder Paphitis stepped down as CEO to become an executive advisor to the board of directors.

Establishing a Network

Credit: Aesop

Over the course of its history, Aesop has established a network of 400 stores in 27 markets across the world. Since 2004, its simple and casual approach to product introduction has earned the brand a global cult following. The moniker Aesop (pronounced ee-sop) draws its inspiration from the Ancient Greek storyteller. And this name is a gentle parody of its competitors’ over-the-top skincare promises. The first store opened in 2004 in Melbourne’s Saint Kilda. And aesthetically, the store itself remains minimalist; amber in colour, with a simple yet bold typeface design.

As part of a larger reorganisation undertaken by Fabio Barbosa, who took over as CEO last year, Natura has been exploring selling a portion or all of Aesop. And now, Barbosa is working hard to simplify the company’s structure and save expenditures.

“With a strengthened financial structure and a deleveraged balance sheet, Natura & Co, exercising strict financial discipline, will be able to sharpen its focus on its strategic priorities, notably our investment plan in Latin America,”

Barbosa says in a statement.

Natura says that the sale of Aesop is going to reduce its overall debt. This allows for more focus on Avon as a global brand; and enhance The Body Shop brand.

“We are proud of the remarkable success of the Aesop brand, and we are extremely grateful to all Aesop’s associates, who contributed immensely not only to Aesop’s success, but also to making Natura &Co what it is today,” Barbosa says.

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