How leaks, demands and a phone call derailed Estée Lauder’s deal to create a $40B luxe giant

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How leaks, demands and a phone call derailed Estée Lauder’s deal to create a B luxe giant — How leaks demands and a phone call derailed Estee Lauders.jpg

Estée Lauder and Puig were on the brink of finalizing a deal that would have created a $40 billion luxury beauty powerhouse. However, talks between the two companies fell apart, preventing the merger that would have combined brands like Tom Ford, Clinique, and MAC with Carolina Herrera and Charlotte Tilbury.

The breakdown in negotiations was attributed to leaks, disagreements between the controlling families, and demands, including those from makeup mogul Charlotte Tilbury. The talks ultimately collapsed due to these issues.

One of the main obstacles in the deal was related to Charlotte Tilbury and the terms of her minority stake in the beauty brand majority-owned by Puig. Despite efforts to reach an agreement, the deal ultimately fell through.

Estée Lauder investors’ disapproval of the merger also played a role in hindering the talks. The company’s return to strong earnings growth further solidified its confidence in remaining independent.

The negotiations between Estée Lauder and Puig spanned months and involved discussions in various cities across continents. While there was apparent agreement on certain issues, challenges arose regarding the governance of the new entity and the structuring of assets such as Charlotte Tilbury and Isdin.

Both founding families, Lauder and Puig, expressed a desire to maintain a level of control in the new group. The companies also faced difficulties in determining the structure of assets like Charlotte Tilbury and Isdin, which are key profit-drivers for Puig.