[FINAL] Estée Lauder Acquires Tom Ford Brand

Brand founder Tom Ford will continue to serve as the brand’s creative lead after closing and through the end of calendar 2023.
Brand founder Tom Ford will continue to serve as the brand’s creative lead after closing and through the end of calendar 2023.

After months of speculation, The Estée Lauder Companies Inc. has agreed to acquire the Tom Ford brand and all its intellectual property. The deal values the total enterprise at $2.8 billion, though the amount to be paid by Lauder for the acquisition is approximately $2.3 billion, net of a $250 million payment to the company at closing from Marcolin S.p.A.

In The Estée Lauder Companies' fiscal year ended June 30, 2022, Tom Ford Beauty reportedly achieved almost 25% net sales growth compared to the prior year; the company expects the brand to eventually achieve annual net sales of 1 billion dollars. 

Brand founder Tom Ford will continue to serve as the brand’s creative lead 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 extend and expand the brand’s existing 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.

Zegna will acquire operations of the Tom Ford fashion business necessary to perform its obligations as licensee. Both companies will collaborate on the creative direction.

Tom Ford's current license with eyewear manufacturer Marcolin will also be "substantially extended," per an announcement. 

The deal allows The Estée Lauder Companies Inc. to own the Tom Ford brand beyond the current license expiration in 2030 and to eliminate Tom Ford-related royalty payments upon closing.

It also opens "new licensing revenue streams and other anticipated synergies," per the organization.

The Estée Lauder Companies Inc. is funding the transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning in July 2025.

The acquisition is expected to close in the first half of calendar 2023.

“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.”

Freda continued, "Zegna and Marcolin are the ideal long-term licensees for Tom Ford fashion and eyewear. We are thrilled to have the continuity they bring to the brand and their steadfast dedication to quality, luxury and craftsmanship will help us to carry this brand into the future.”

Ford himself said, “I could not be happier with this acquisition as The Estée Lauder Companies is the ideal home for the brand. They have been an extraordinary partner from the first day of my creation of the company and I am thrilled to see them become the luxury stewards in this next chapter of the Tom Ford brand. Ermenegildo Zegna and Marcolin have been spectacular long-standing partners as well and I am happy to see the preservation of the great relationship that we have built over the past 16 years. With their full commitment, I trust they will continue the brand’s future as a luxury company that strives to produce only the highest quality fashion and eyewear.”

De Sole said, “I am delighted with this acquisition. I view The Estée Lauder Companies, the first partner in our Tom Ford journey, as the trusted party to continue the extraordinary legacy of the Tom Ford brand. I thank Tom for his magnificent vision and leadership, and our amazingly talented Tom Ford team for their hard work and commitment to the brand.”

“We are honored that Tom Ford has been part of our ELC family for more than fifteen years, from our first collaboration with the Estée Lauder brand to the launch of Tom Ford Beauty and through its most recent successes,” said William P. Lauder, executive chairman, The Estée Lauder Companies. “ELC and Tom Ford share a deep appreciation for luxury, creativity, entrepreneurial spirit, and a commitment to excellence, and above all, the extraordinary talent that fuels our businesses.”

“We are committed to driving the continued success of Tom Ford Beauty, and this exciting acquisition strategically positions us for future growth,” said Guillaume Jesel, president, luxury business development, The Estée Lauder Companies. “Tom Ford is a true visionary and the ultimate architect of luxury. Together with the legendary Domenico De Sole, they have created a remarkable new world of luxury. It is an honor to continue to lead the brand and the exceptionally talented team, and manifest Tom Ford’s extraordinary vision of luxury beauty and beyond.”

“We have been partners and shareholders of the Tom Ford fashion business since its inception," said Ermenegildo “Gildo” Zegna, CEO of Ermenegildo Zegna Group. "This transaction is the first since our listing in December 2021, and confirms our commitment to leverage our platform to create value for all of our stakeholders. We have been so inspired by the incredible talent at Tom Ford and are delighted to embark on this powerful and enriching relationship with The Estée Lauder Companies.”

“It has been an incredible journey over the last two decades to establish the Tom Ford eyewear business among the global leaders of unparalleled quality and style," said Fabrizio Curci, chief executive officer of Marcolin S.p.A. "We are thrilled to work with The Estée Lauder Companies with our exclusive and perpetual license for the brand, which will allow us to further support the growth of this amazing brand. Tom Ford, Domenico De Sole and their best-in-class team have established one of the world’s most innovative global luxury brands and we are excited to build its vibrant future."

Previously: The Estee Lauder Companies' acquisition of the Tom Ford brand is imminent, per Bloomberg.

The deal would allow the beauty company to license Tom Ford eyewear and apparel to other companies, while allowing it to focus on beauty opportunities.

Just days ago, The Estee Lauder Companies entered exclusive talks to acquire the Tom Ford brand for $2.8 billion, per the Financial Times.

A Wall Street Journal report From August 2022 initially noted that the Estée Lauder Companies was negotiating to acquire the brand.

In a Q2 2022 earnings call, CEO Fabrizio Freda said, "Tom Ford Beauty exemplifies the benefits of a strategic focus on heroes and innovation."

The potential $3 billion deal would be about 3x what the company paid for Deciem and not quite twice what it paid for Too Faced.

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