L’Oreal (OREP.PA) will purchase Australian luxury brand Aesop from Natura & Co (NTCO3.SA) for $2.53 billion to expand into high-end cosmetics and China.
According to Dealogic statistics, L’Oreal, which owns Maybelline and Lancome, has made its largest brand acquisition.
It helps Brazil’s Natura, owner of Avon and The Body Shop, with decreasing margins and huge debt.
L’Oreal sold The Body Shop to Natura in 2017; it owns Aesop, a retail beauty and personal-hygiene brand.
Jie Zhang, the Alphavalue analyst, stated, “The purchase will reinforce L’Oreal’s leadership in the natural cosmetics business.” Major companies were entering the fast-growing beauty industry.
Aesop has “huge development potential” in China, where the Australian brand opened two stores in the fourth quarter of 2022, and travel retail, according to L’Oreal CEO Nicolas Hieronimus.
Ian Simpson, the Barclays analyst, estimates Aesop will add 1.2% to L’Oreal’s organic sales this year. The French cosmetics firm is recognized for buying rising labels and building them up through its worldwide distribution network.
“With L’Oreal’s solid track record of producing value from prior acquisitions, we expect this purchase to enhance sentiment, despite its low size relative to L’Oreal,” he added.
Natura’s most successful brand has approximately 400 outlets and had $537 million in sales in 2022, up 21% in constant currency.
