The Estée Lauder Companies Inc has signed an agreement to acquire the Tom Ford brand in a deal that values the total enterprise at US$2.8 billion.
The acquisition, subject to certain conditions, including regulatory approvals, is expected to close in the first half of 2023 (calendar year).
“We are honoured that Tom Ford has been part of our ELC family for more than fifteen years, from our first collaboration with the Estée Lauder brand to the launch of Tom Ford Beauty and through its most recent successes,” said William P. Lauder, Executive Chairman, The Estée Lauder Companies (ELC).
“ELC and Tom Ford share a deep appreciation for luxury, creativity, entrepreneurial spirit, and a commitment to excellence, and above all, the extraordinary talent that fuels our businesses.”
The deal will establish its longstanding partner ELC as the sole owner of the Tom Ford brand and all its intellectual property.
The amount to be paid by ELC for the acquisition is approximately $2.3 billion, net of a $250 million payment to ELC at closing from leading global eyewear manufacturer Marcolin S.p.A., which is ‘substantially extending’ its long-term licence agreement for Tom Ford eyewear.
ELC expects to fund the transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning July 2025.
“It has been an incredible journey over the last two decades to establish the Tom Ford eyewear business among the global leaders of unparalleled quality and style,” said Fabrizio Curci, Chief Executive Officer of Marcolin S.p.A.
“We are thrilled to work with The Estée Lauder Companies with our exclusive and perpetual license for the brand, which will allow us to further support the growth of this amazing brand.”
The deal will also extend and expand the Tom Ford brand’s longstanding relationship with Ermenegildo Zegna N.V. (Zegna) to include a long-term licence for all men’s and women’s fashion, as well as accessories and underwear.
“We have been partners and shareholders of the Tom Ford fashion business since its inception,” said Ermenegildo ‘Gildo’ Zegna, CEO of Ermenegildo Zegna Group.
“This transaction is the first since our listing in December 2021 and confirms our commitment to leverage our platform to create value for all of our stakeholders.
“We have been so inspired by the incredible talent at Tom Ford and are delighted to embark on this powerful and enriching relationship with The Estée Lauder Companies.”
ELC first introduced Tom Ford Beauty in 2006. It was established with an initial luxury fragrance and has since grown into a leading, global luxury fragrance and makeup brand, which ECL expects will achieve ‘annual net sales of one billion dollars over the next couple of years’.
“We are incredibly proud of the success Tom Ford Beauty has achieved in luxury fragrance and makeup and its dedication to creating desirable, high-quality products for discerning consumers around the world,” said Fabrizio Freda, President and Chief Executive Officer, ELC.
“As an owned brand, this strategic acquisition will unlock new opportunities and fortify our growth plans for Tom Ford Beauty.
“It will also further help to propel our momentum in the promising category of luxury beauty for the long-term, while reaffirming our commitment to being the leading pure player in global prestige beauty.
“We are committed to driving the continued success of Tom Ford Beauty, and this exciting acquisition strategically positions us for future growth,” added Guillaume Jesel, President, Luxury Business Development, ELC.
Tom Ford, Founder and CEO of Tom Ford International, will continue to serve as the brand’s creative visionary after closing and through the end of 2023.
“I could not be happier with this acquisition as The Estée Lauder Companies is the ideal home for the brand,” said Ford.
“They have been an extraordinary partner from the first day of my creation of the company and I am thrilled to see them become the luxury stewards in this next chapter of the Tom Ford brand.
“Ermenegildo Zegna and Marcolin have been spectacular long-standing partners as well and I am happy to see the preservation of the great relationship that we have built over the past 16 years.
“With their full commitment, I trust they will continue the brand’s future as a luxury company that strives to produce only the highest quality fashion and eyewear.”
Domenico De Sole, Chairman of Tom Ford International, will stay on as a consultant also until the end of 2023.