Estee Lauder agrees to buy Tom Ford brand for $3.8b

Fashion designer Tom Ford will stay on with the brand through the end of 2023, though his role beyond that is not yet clear. PHOTO: AFP

NEW YORK – Designer, film director, art collector and fashion world provocateur. Tom Ford can now add one more accolade to his list: billionaire.

On Tuesday, Estee Lauder announced it agreed to buy his company in a deal that totalled US$2.8 billion (S$3.8 billion).

The deal is the largest in the luxury industry in 2022, and is a testament to the enduring power of perfume. It comes as high-end brands are looking for new avenues for growth as business in China – once the engine for luxury beauty businesses – has become more difficult amid pandemic restrictions.

Ford, 61, will stay on with the brand through the end of 2023, though his role beyond that is not yet clear. Saying he “could not be happier”, he added of Estee Lauder in a statement: “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.”

The acquisition was driven by the strength of Tom Ford’s beauty business, which includes fragrance, cosmetics and skincare, and for which Estee Lauder has had a long-standing licensing agreement.

The Tom Ford high-end scents, which include Black Orchid and Tuscan Leather, retail for more than US$100 and routinely make the bestseller lists.

The deal also brings apparel to Estee Lauder, which has been strictly focused on beauty, with a portfolio of brands that include La Mer, Bobbi Brown and Clinique.

“We are incredibly proud of the success Tom Ford Beauty has achieved in luxury fragrance and make-up and its dedication to creating desirable, high-quality products for discerning consumers around the world,” said Mr Fabrizio Freda, chief executive of Estee Lauder. He added the deal would further his company’s growth in “luxury beauty for the long term”.

Estee Lauder, which will pay US$2.3 billion, will finance the deal through a combination of cash, debt and US$300 million in deferred payments.

Marcolin, the Italian group that owns the licence for Tom Ford eyewear, will pay US$250 million to Estee Lauder when the deal closes.

Estee Lauder reported in November that sales in Asia fell because of the region’s strict pandemic policies. Lower growth in China also forced it to reduce its financial forecast for 2023. Shares of the company are down about 40 per cent in 2022. NYTIMES

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