US beauty powerhouse Estée Lauder is in talks with Spanish company Puig, the group behind Jean Paul Gaultier and Carolina Herrera’s iconic fragrances.
Shares in Barcelona-based Puig jumped more than 13 per cent after confirming discussions with the US cosmetics giant.
According to the Financial Times, a completed deal could create a luxury beauty powerhouse valued at around €35?billion, uniting major cosmetics, fragrance, and fashion brands under one roof.
Puig, led by Jose Manuel Albesa – a native of Zaragoza and the first CEO outside the Puig family – owns beauty and fashion brands such as Charlotte Tilbury, Nina Ricci, and Penhaligon’s.
Estee Lauder’s portfolio, meanwhile, includes Bobbi Brown, Clinique, Tom Ford Beauty, and Jo Malone.
Combined, the two companies generated over €17?billion in sales last year.
A merger would help them bolster their positions amid slowing consumer spending and rising inflation affecting the retail and consumer sectors.
Any deal would require approval from the Puig and Lauder families, who remain the largest shareholders in their respective companies.
Puig traces its roots back to 1914, while Estee Lauder and her husband Joseph founded their company in 1946.
From just four initial products, Estee Lauder has grown into the world’s second-largest cosmetics company, behind L’Oreal.
However, Estee Lauder’s share price has fallen 80 per cent since its 2021 peak, amid declining revenues and uncertainty over the succession of Fabrizio Freda, who retired last year after 16 years as CEO.
The potential merger could reinvigorate both groups as the beauty industry navigates economic pressures.
Despite this, Estee Lauder’s stock fell 7.7 per cent on news of the talks, reflecting investor caution.
Neither company has confirmed a deal with Puig saying: “No final decision has been made and no agreement has been reached.”
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