Estee Lauder buys Tom Ford in a deal worth $2.8 billion

Estee Lauder Cos. acquired luxury brand Tom Ford in a $2.8 billion deal, marking the beauty company’s largest acquisition to date.

As part of the deal announced Tuesday, Ermenegildo Zegna Group and Marcolin SpA will enter long-term licensing agreements for Tom Ford Fashion and Tom Ford Eyewear, respectively.

While Estee Lauder said the deal values ​​the total venture at $2.8 billion, the New York-based beauty company is expected to pay close to $2.3 billion, following a $250 million payment from Italian eyewear manufacturer Marcolin SpA.

The purchase, subject to regulatory approvals, is scheduled to close in the first half of 2023.

Under the agreement, Tom Ford, founder and CEO of Tom Ford International, will remain the creative visionary for the brand until the end of 2023. Domenico De Sole, Chairman of Tom Ford International, will remain an advisor until the same time.

Estee Lauder introduced the Tom Ford Beauty line in 2006. In Estee Lauder’s fiscal year that ended June 30, the brand’s net sales grew nearly 25% over the previous year. The beauty company said that in the next few years, it expects the beauty line to achieve net sales of $1 billion.

“This strategic acquisition will open new opportunities and advance our growth plans for Tom Ford Beauty,” said Fabrizio Freda, President and CEO of The Estee Lauder Company, in a statement. “It will also help drive our momentum in the promising luxury beauty category in the long term, while reaffirming our commitment to being the leading player in the world of prestige beauty.”

Estee Lauder said it aims to fund the acquisition through a combination of cash, debt and $300 million in deferred payments to the sellers that become due starting in July 2025.