By Scott Kanowsky
Investing.com -- Shares in L'Oréal SA (EPA:OREP) edged higher on Tuesday after the French cosmetics giant announced that it had reached a deal with Natura&Co Holding SA (NYSE:NTCO) to acquire its Australian luxury brand Aesop for an enterprise value of $2.53 billion.
In a statement, L'Oréal Chief Executive Officer Nicolas Hieronimus said the purchase of Aesop represented an opportunity to "unleash massive growth potential," particularly in China - a key source of demand for high-end goods.
It marks L'Oréal's biggest brand acquisition to date, Reuters reported, citing data from Dealogic.
Aesop currently operates around 400 stores and posted sales of $537M in 2022. The move to buy a relatively developed name represents a strategy shift for L'Oréal, which has typically snapped up brands at an earlier stage to harvest significant revenue synergies, according to analysts at Jefferies.
Brazil's Natura, meanwhile, noted that the sale will help strengthen its financial structure and reduce debt on its balance sheet, adding that it will now focus on its expansion plans in Latin America. Natura's other businesses include Avon and The Body Shop.
The Jefferies analysts said the offloading of Aesop will help Natura improve its leverage "considerably" even while it still invests for growth.
Begin trading today! Create an account by completing our form
At One Financial Markets we are committed to safeguarding your privacy.
Please see our Privacy Policy for details about what information is collected from you and why it is collected. We do not sell your information or use it other than as described in the Policy.
Please note that it is in our legitimate business interest to send you certain marketing emails from time to time. However, if you would prefer not to receive these you can opt-out by ticking the box below.
Alternatively, you can use the unsubscribe link at the bottom of the Demo account confirmation email or any subsequent emails we send.
By completing the form and downloading the platform you agree with the use of your personal information as detailed in the Policy.