L’Oreal, the French cosmetics group, has agreed to acquire Australian luxury brand Aesop from Brazil’s Natura & Co for $2.53 billion. The deal expands LOreal’s presence in the luxury cosmetics market while offering financial relief for the Brazilian firm, which has been burdened by heavy debt and shrinking margins.
Most Profitable Brand
Aesop is Natura’s most profitable brand, operating nearly 400 stores and generating sales of $537 million in 2022, a 21% increase in constant currency from the previous year. It reported double-digit growth across all regions in 2022 and made a successful entry into the Chinese market.
LOreal CEO Nicolas Hieronimus said the acquisition would help unleash Aesop’s growth potential, particularly in China and travel retail. For Natura, the deal is part of a broader organizational shakeup that began with the departure of former CEO and executive chairman Roberto Marques last year. The sale will support Natura’s financial deleverage and focus on strategic priorities, including the integration of its Latin America operations, optimization of Avon International’s footprint, and continued improvement of The Body Shop’s business.
Commitment toward Sustainability
The acquisition is subject to regulatory approvals and is expected to close in the third quarter of 2023, with payment in cash. The deal marks LOreal’s latest move to expand its luxury portfolio and reinforces its commitment to sustainability. The company has been investing in environmentally friendly initiatives and acquiring sustainable brands, such as Logocos Naturkosmetik and Garancia, in recent years.
Largest Beauty Brand Globally
With the acquisition of Aesop, LOreal is expected to consolidate its position as the world’s largest beauty company, with a presence in over 150 countries. The move also positions L’Oreal to take advantage of the growth potential of the global luxury cosmetics market, which is projected to reach $97 billion by 2026, according to a report by Grand View Research.
A Strategic Move
Overall, the acquisition of Aesop is a strategic move for L’Oreal, giving the company a stronger foothold in the high-end cosmetics market and aligning with its sustainability goals. For Natura, the sale of Aesop provides financial relief and allows the company to focus on its strategic priorities. The acquisition is expected to have a positive impact on both companies and the cosmetics industry as a whole.
