Estée Lauder in talks on merger with Jean Paul Gaultier owner Puig

The US cosmetics company Estée Lauder is in talks over a potential merger with the Spanish group Puig, the owner of brands including Jean Paul Gaultier and Rabanne, to create a $40bn fashion and beauty giant.
Estée Lauder is one of the world’s biggest manufacturers of skin care, makeup and fragrances with a portfolio that includes Clinique, Bobbi Brown and Tom Ford Beauty.
Puig, which floated on the Madrid stock market two years ago, owns brands including Charlotte Tilbury, Carolina Herrera and Dries van Noten.
Both brands confirmed that they were holding discussions over a potential “business combination”, but gave no detail on the possible structure of the merger.
“No final decision has been made and no agreement has been reached,” Puig said. “Until an agreement exists, it cannot be guaranteed that any transaction will take place or what its terms would be.”
Shares in Puig climbed 14% in early trading on Tuesday.
“While there might be a crossover in customer base, there are distinct differences between the frequency of their product sales,” said Dan Coatsworth, the head of markets at AJ Bell.
“Estee Lauder is focused on skincare, makeup and haircare, which are the type of products people buy more regularly than the designer clothing offered by Puig. The key area where there is a clear overlap between the two brands is fragrances and perfumes. [However,] one could make a good argument that the two companies’ activities are complementary.”
However, negative analyst sentiment towards a merger in the US led to Estée Lauder’s share price ending down almost 8% at the close of trading Monday.
Analysts at Citigroup said that the potential merger came at a time when the company was trying to see through a business turnaround. Estée Lauder’s share price is down 80% from an all-time peak in 2021.
“[Estée Lauder] is in the early stages of a business turnaround with a deal of this size creating complexity and execution risk,” said Citigroup.
However, a combination with Puig could help both businesses add significant scale as concerns rise over a slowdown in consumer spending and the impact of inflation, which is expected to increase in part due to the US-Israeli war with Iran.
Puig has also struggled in recent years, after an initial public offering in 2024 that valued the group at €13.9bn. Its shares have fallen nearly 30% since listing.
The confirmation of the potential combination with Estée Lauder has cheered investors. The majority of the voting rights remain controlled by the Puig family, which founded the business 110 years ago.
Last week, the Barcelona-based company announced the appointment of José Manuel Albesa as its first chief executive who is not a member of the Puig family.
He succeeded Marc Puig, who had run the company since 2004 and remains executive chair.
Puig has struck 11 separate deals to buy fragrance and fashion brands between 2011 and 2024.