Estée Lauder In Talks To Buy Tom Ford

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NEW YORK, UNITED STATES — Last month, D.M. Fashion Book reported that luxury house Tom Ford, founded by the former longtime creative director of Gucci, is exploring a potential sale, according to people with knowledge of the matter (see it here).

During our original post, we also mentioned that according to BoF, the American designer is “working with investment bank Goldman Sachs Group Inc on the effort,” said the people, who asked to not be identified because the matter isn’t public.

It was just confirmed via an article in WWD, that the Estée Lauder Cos. has emerged as a surprise front-runner to acquire Tom Ford International, according to industry sources.

While it’s far from a done deal, and banking sources said there are still other players in the picture, the owner of Clinique, Bobbi Brown and Jo Malone is said to be in talks to acquire the luxury fashion label.

As first reported by The Wall Street Journal, the beauty giant has been in negotiations over the past few weeks with Tom Ford, and the number on the table is said to be around $3 billion, industry sources confirmed.

If this deal does go through successfully, this would mark the cosmetics giant’s first foray into fashion, it has held a longtime licensing partnership with Tom Ford Beauty and the so-called ultra prestige brand has been performing well, especially in the fragrance category.

One banking source told WWD that such a move could be the beginning of it positioning itself into a luxury brand like LVMH Moët Hennessy Louis Vuitton and Kering.

Noting that most of the value in the deal would come from cosmetics and fragrance, with eyewear produced under license, another financial source said: “It doesn’t surprise me at all that Estée Lauder would want something like this.”

The source said the Tom Ford fragrance sales were pegged at around $275 million, but cautioned that, even if makeup and eyewear were as big, “$3 billion seems like a huge number for valuation.”

But, according to banking sources, there are other players interested, too.

Recently, Kering, the owner of Gucci, said it was looking at entering the beauty segment during its first-half results, although it did not specify whether it might follow in the footsteps of Hermès International by launching its own beauty lines, or whether it was on the hunt for acquisitions.

Beauty is definitely an area where we could contemplate some initiatives in the future and all options are open,” said group managing director Jean-François Palus.

Photos Credit: Alessandro Lucioni / Gorunway.com

Source: WWD

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Donovan

Donovan is the CEO and Editor-In-Chief of www.dmfashionbook.com. For all general inquiries please email don@dmfashionbook.com Donovan has a BA in Journalism & Media Studies from the prestigious Rutgers University. He's currently studying entertainment and fashion law.

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