L’Oréal, the French skincare giant, has agreed to acquire the luxury cosmetics brand Aesop for a whopping $2.53bn (€2.32bn). Aesop, which was founded in Melbourne and has since developed a cult following worldwide, was owned by Brazil’s Natura & Co. The acquisition follows months of negotiations, during which other companies, including private equity firm Permira and Chinese investment firm Primavera Capital, also showed interest in the Australian brand. Aesop will now join a cast of luxury brands at L’Oréal, such as Lancôme and Yves Saint Laurent, as the French company places its bets on a continued drift towards high-end cosmetics.
L’Oréal has been making moves to boost its high-end segment, which it calls “active cosmetics,” with brands like La Roche-Posay and SkinCeuticals. In recent months, the company bought Skinbetter Science, a US maker of skincare creams distributed via doctors, in order to further this segment. Its luxury unit surpassed its mass-market division two years ago to become the group’s largest, and L’Oréal expects this trend to continue. The acquisition of Aesop will also bring a focus on clean, sustainable ingredients that can appeal to young consumers, according to Bernstein analyst Bruno Monteyne.
For Natura, the Brazilian beauty firm that owned Aesop, the transaction will help cut debt and allow it to focus on turning around other businesses. Following the announcement of the deal, Natura’s US depository receipts surged as much as 15% in late trading. Aesop opened two stores in China recently, and they have become the brand’s top sellers worldwide, underscoring its potential there, according to Rogerio Fujimori, an analyst at Stifel.
The acquisition of Aesop by L’Oréal is a significant move in the beauty industry, as it brings together two major players in the luxury cosmetics market. The deal is expected to close in the second quarter of 2021, subject to regulatory approvals.