The deal values the total Tom Ford enterprise at $2.8 billion.
After many weeks of speculation and talks, The Estée Lauder Companies Inc. has signed an agreement to acquire the Tom Ford brand. The deal will establish ELC, which was already a longstanding partner of the brand, as the sole owner of the Tom Ford brand and all its intellectual property.
The deal values the total enterprise at $2.8 billion. 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 Marcolin S.p.A. ELC expects to fund this transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning in July 2025.
Under the agreement, 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 calendar 2023. Domenico De Sole, chairman of Tom Ford International, will stay on as a consultant until that same time.
The deal will also extend and expand the Tom Ford brand’s longstanding relationship with Ermenegildo Zegna N.V. to include a long-term license for all men’s and women’s fashion as well as accessories and underwear. As part of this transaction, Zegna will acquire operations of the Tom Ford fashion business necessary to perform its obligations as licensee. ELC and Zegna will align closely on the creative direction to continue building on the luxury positioning of the Tom Ford brand.
The brand’s current license with Marcolin, one of the leading global eyewear manufacturers, will also be substantially extended.
Positioning Tom Ford Beauty for Further Growth
Tom Ford Beauty, first introduced by ELC in 2006, is a luxury beauty brand with a highly differentiated collection of fragrance, makeup, and skin care. Established with an initial luxury fragrance, Tom Ford Beauty has since grown into one of the most successful and aspirational beauty brands in the world.
“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, The Estée Lauder Companies. “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.”
Tom Ford Beauty is strongly positioned in the luxury fragrance and makeup categories, areas that are expected to outperform industry growth over the coming years. This strategic acquisition supports the next level of growth for Tom Ford Beauty in key markets for luxury and online channels globally.
The brand has delivered impressive success, including growing strong double-digit net sales on a compound annual basis from fiscal years 2012 through 2022. In ELC’s fiscal year ended June 30, 2022, Tom Ford Beauty achieved nearly 25% net sales growth as compared to the prior year, and over the next couple of years, ELC expects that the brand will achieve annual net sales of one billion dollars. The brand continues to have strong momentum across channels and key markets resulting in a prestige fragrance ranking in the top 15 in the United States and top 10 in China. The brand has received over twenty awards from The Fragrance Foundation.