After L'Oréal acquired Kering Beauty, Estée Lauder couldn't sit still, negotiating to acquire the century-old perfume giant valued at 70 billion yuan.

Ask AI · Why did Estée Lauder rush to negotiate with PUIG after L’Oréal’s actions?

Source: Times Finance Author: Zhou Jiabao

Image source: Visual China

Old rival L’Oréal Group took over Kering Beauty, and Estée Lauder couldn’t sit still.

On March 24, Beijing time, American beauty giant Estée Lauder Companies (NYSE: EL) announced that it is in discussions regarding a potential business merger with Spanish fragrance and cosmetics group PUIG. The news quickly drew market attention.

PUIG Group (BME: PUIG) was founded in 1914, with its fragrance business as the foundation, and is set to debut on the Madrid Stock Exchange in 2024. It is one of the most influential high-end beauty and fashion groups in Europe. Its portfolio includes well-known high-end fragrance brands such as BYREDO, PENHALIGON’S, L’Artisan Parfumeur, as well as makeup and skincare brands like Charlotte Tilbury, and fashion brands like Dries Van Noten. Notably, the fragrance business contributes over half of its revenue. In fiscal year 2025, the group’s revenue is expected to be around €5.042 billion (approximately ¥40.2 billion).

After the announcement, as of the market close on March 23, Estée Lauder’s stock price fell 7.72% to $79.29 per share, with a market capitalization of approximately $28.7 billion (approximately ¥197.9 billion). Meanwhile, PUIG Group’s stock price on March 23 was €15.57 per share, with a total market capitalization of around €8.85 billion (approximately ¥70.6 billion). If the two companies successfully merge, their combined market capitalization would be close to ¥260 billion.

However, Estée Lauder Group stated that no final decision has been made yet. Details regarding the transaction structure, amount, and other specifics have not been disclosed in the announcement.

Industry insiders view this merger as a crucial attempt by Estée Lauder in the face of years of performance pressure.

Financial reports show that for fiscal years 2023 to 2025, Estée Lauder’s net sales were $15.91 billion, $15.61 billion, and $14.33 billion, respectively, showing a continuous decline. In fiscal year 2025, Estée Lauder’s net loss reached $1.133 billion. In fiscal year 2023, the group had a net profit of $1.010 billion.

To reverse the downturn, Estée Lauder initiated a deep restructuring at the beginning of 2025. After the new President and CEO Stéphane de La Faverie took office, a brand new growth strategy plan called “Reimagining Beauty” was launched, emphasizing resource focus and streamlining the brand matrix, concentrating investments on high-growth potential brands and channels, and optimizing operational efficiency.

However, while Estée Lauder was reorganizing internally, the external competitive environment was also changing rapidly.

In October 2025, L’Oréal Group announced the acquisition of the beauty business of luxury group Kering, a deal that included not only the fragrance brand Creed but also granted L’Oréal exclusive rights for 50 years to the fragrance and beauty products of brands such as Gucci, Bottega Veneta, and Balenciaga, including R&D, production, and distribution rights.

At the same time, luxury giants like LVMH have also begun to enter the beauty market. In March 2025, LV officially announced its entry into the beauty sector, launching a new beauty line, La Beauté Louis Vuitton.

Faced with L’Oréal’s aggressive expansion and competition from luxury giants, Estée Lauder urgently needs to enhance its competitiveness and market share in key areas such as high-end fragrances.

If Estée Lauder successfully partners with PUIG Group, the latter’s established high-end fragrance brand portfolio will complement Estée Lauder’s existing strengths in skincare and makeup, allowing Estée Lauder Group to regain initiative in the high-end beauty market. However, the potential merger also comes with challenges. Financial pressures and the complexity of brand integration are hurdles that Estée Lauder must overcome in the future.

It is worth noting that Estée Lauder’s latest quarterly financial report performed better than market expectations, seen by the market as an important signal of the group’s reform effectiveness and performance recovery. In the second fiscal quarter of 2026 (ending December 31, 2025), Estée Lauder Group’s net sales increased by 6% year-on-year to $4.229 billion; operating profit margin improved to 9.5%.