Gucci owner Kering to sell beauty business to L'Oreal for €4bn

(Sharecast News) - Gucci owner Kering has agreed to sell its beauty business to L'Oreal for €4bn as part of a long-term strategic partnership.

The deal, announced on Sunday, will see L'Oreal will buy The House of Creed, the beauty and fragrance licenses of Houses of Kering and enter into "an exclusive venture to explore business opportunities in the field of wellness and longevity".

Kering said the partnership includes the rights to enter into a 50-year exclusive license for the creation, development, and distribution of fragrance and beauty products for Gucci, once the current license with Coty expires.

Chief executive Luca de Meo said: "This strategic alliance marks a decisive step for Kering.

"Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major Houses, allowing them to achieve scale in this category and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L'Oréal's stewardship.

"Together, we will also venture into new frontiers of wellness, combining the unrivalled expertise of L'Oréal with our unique luxury reach. This partnership allows us to focus on what defines us best: the creative power and desirability of our Houses."

Kering also owns Saint Laurent, Bottega Veneta, Balenciaga and Boucheron, among other brands.

L'Oreal chief executive Nicolas Hieronimus said: "I am delighted to forge this long-term strategic alliance with one of the world's most prestigious, creative and visionary luxury groups. This partnership will further solidify our position as the world's #1 luxury beauty company and allow us to explore new avenues in wellness together."

At 0820 BST, Kering shares were up 4.3% at €322.80, while L'Oreal was 0.7% higher at €393.35.