US $2.8 billion, the largest acquisition of beauty cosmetics this year will be finalized

Tom Ford once offered a high price of $3 billion, which has exceeded the purchase price of Versace and Supreme that year.

On November 12, according to the Financial Times, insiders said that Estee Lauder bought Tom Ford, a famous cosmetics brand, at a price of nearly 2.8 billion US dollars (about 19.7 billion yuan), defeating a group of "pursuers" including Kaiyun Group. Although the two sides have not officially announced yet, the dust is about to settle on this major acquisition event in the cosmetics and fashion industry that has attracted the most attention this year.

In fact, it has long been rumored that Tom Ford spent his time with Estee Lauder. As early as August of this year, Estee Lauder had negotiated a high price acquisition of Tom Ford for 3 billion dollars. This became the largest acquisition in the history of Estee Lauder Group.

But at the beginning of November, a strong competitor joined this huge acquisition competition. According to the Wall Street Journal, citing insiders, the French luxury giant Kaiyun Group is also in in-depth negotiations on the acquisition of Tom Ford. At that time, Kaiyun said: "Kaiyun Group is in a leading position in this acquisition war, and the acquisition transaction may be concluded soon." But in the end, Tom Ford chose Estee Lauder.

Tom Ford is a brand of the same name founded by legendary fashion designer Tom Ford in 2005. As the founder, Tom Ford has a deep relationship with the predecessor of Kaiyun Group, PPR Group.

Tom Ford once created a brilliant era of GUCCI brand as the creative director. After GUCCI was acquired by PPR in 1999, he also served as the creative director of another brand, YSL, under PPR, and became famous in the luxury industry. In 2004, Tom Ford left the company together with the former CEO of GUCCI, and then launched his own brand Tom Ford of the same name in April 2005, gradually becoming unique in glasses, men's wear and other categories.

In the early days, Tom Ford brand developed and grew mainly through its fashion accessories category, and signed a glasses license agreement with Marcolin, the world's leading glasses company. Later, it signed a beauty licensing agreement with Estee Lauder and launched cosmetics such as perfume and cosmetics. Some analysts said that Tom Ford could bring Estee Lauder 275 million dollars in revenue every year.

When the Tom Ford brand was introduced into China by Estee Lauder in 2015, cosmetics and perfume were highly sought after and became one of the representatives of high-end cosmetics with outstanding performance. Many Chinese consumers still remember that Tom Ford lipstick case named after 50 boys, with a bold and enthusiastic brand marketing style, was very popular on the domestic social network in that year, and many stars and beauty bloggers brought goods for it.

The cosmetics business of Tom Ford brand is still in the charge ofEstee Lauder, and has entered the billion dollar club. It is also reported that Tom Ford brand will commercialize the watch production line and win the important category in the luxury market.

However, affected by the epidemic, Tom Ford has not been so good in the past two years, and even missed the fashion week activities in 2021 and 2022. At the same time, the Tom Ford brand was forced to close its stores and lay off employees, and the financial data was not beautiful. In order to cope with the epidemic and adjust the business landscape, Tom Ford hopes to get rid of the difficulties by selling. At the age of 60, he also recently stepped down as the president of CFDA (American Fashion Designers Association). At the beginning of July this year, Tom Ford worked with Goldman Sachs Group to seek a sale, with a price tag of $3 billion.

However, according to Euromonitor International, Tom Ford's annual revenue is about 800 million dollars, and the price of 3 billion dollars is obviously too expensive. However, in view of Tom Ford's position in the fashion industry and unique style, many pursuers, such as Kaiyun Group, Estee Lauder, L'Oreal, are willing to pay for this premium.

According to many media reports, the sales of Tom Ford cosmetics have recorded a historic growth this year. Especially in China, the introduction of new perfume has triggered a wave of shopping. Tom Ford Beauty perfume can quickly occupy a place in the high-end market in China, thanks to the full support of Estee Lauder.

As early as 2011, Tom Ford and Estee Lauder jointly launched the Tom Ford Beauty cosmetics line, which covers eye shadow, lipstick and other categories that are still popular today, helping Tom Ford open a new world in the cosmetics industry.

By 2015, after Estee Lauder introduced Tom Ford cosmetics to China, it began to set up counters in first tier cities such as Beijing, Shanghai and Hangzhou. The Chinese market has opened rapidly, and Tom Ford has indeed won the favor of Chinese consumers. In Estee Lauder's financial report, Tom Ford's contribution to the group in the field of perfume and cosmetics has also been mentioned many times.

So when Tom Ford sought to acquire, Estee Lauder soon joined the negotiation, and was even willing to pay its own annual profit to buy, even though Estee Lauder's recent revenue growth was not optimistic.

Recently, Estee Lauder Group announced its financial results for the first quarter of fiscal year 2023. The financial report shows that the net sales of Estee Lauder Q1 was 3.93 billion US dollars, down 11% year on year, further expanding the 10% drop compared with the last quarter, and the net profit fell 29% year on year to 489 million US dollars.

In addition, due to the epidemic, the business of duty-free shops in Hainan decreased, and the sales of Tom Ford cosmetics fell 10% to US $1052 million. In addition, although Estee Lauder is still the leader in the growth of high-end cosmetics market in China, its sales channels mainly rely on e-commerce and Hainan duty-free stores, rather than the original high-end department store counters. The e-commerce channels occupy a large number of GMVs, which will cause unpredictable damage to the high-end positioning and pricing of the brand.

Estee Lauder wants to acquire the whole brand of Tom Ford, which is also reasonable. If it is acquired by other companies, Tom Ford's cosmetics, perfume and other flagship businesses may also be withdrawn, and Estee Lauder may lose an important growth point.

On the basis of continuing to operate Tom Ford perfume, Estee Lauder will take the first step to become a luxury giant like Kaiyun and LVMH if it can enter the clothing market with its glasses and clothing business.

Another protagonist of the acquisition of "love triangle" is the luxury giant Kaiyun Group. In fact, Kaiyun Group did not join the competition at the beginning, but the news of participating in the competition came out in early November. Compared with the high-profile "pursuit" of Estee Lauder, Kaiyun Group seems to be 3 months late. However, Kaiyun is still regarded as a strong competitor of Estee Lauder by the outside world.

However, many people ignored that Kaiyun Group and Tom Ford had an unhappy past in their early years. Kaiyun used to be Tom Ford's old boss, but due to various contradictions, the two ended up in discord. This may be one of the reasons that Kaiyun did not participate in the acquisition negotiations at the first time. However, the market never stopped speculating and expecting it to be a perfect match again.

As a result, this low-key entry of Kaiyun triggered a lot of industry speculation. Many industry analysts were more optimistic about Kaiyun, and a lot of news even brought good news: on November 4, the share price of Kaiyun Group rose by more than 6% in the Paris Stock Exchange.

Why did Kaiyun Group, which once had a grudge, join Tom Ford in the second half?

For a long time, Kaiyun Group has relied too much on Gucci, which has generated more than half of the group's total revenue. From January to September this year, Gucci's revenue was 7.75 billion euros out of the total revenue of Kaiyun Group of 15 billion euros. However, in the past 12 months, Gucci's revenue growth has been slowing down. If the silence continues, Kaiyunshi must find other growth points.

This is why, even though Tom Ford's valuation seems to be too high, some stockbrokers believe that this acquisition is meaningful for Kaiyun, because this star brand may alleviate the worry that Kaiyun relies too much on a single brand. In addition, even if Kaiyun cannot obtain tangible benefits through the acquisition of Tom Ford, in view of Tom Ford's international reputation and high-end style, it will also help Kaiyun Group consolidate its position in the luxury industry, and become a powerful engine for Kaiyun to enter the beauty market to achieve diversified development.

However, the premise of betting on the Tom Ford brand is that Tom Ford himself can continue to take charge of the brand and inject new design inspiration. However, it is difficult to decide whether Tom Ford, now in his 60s, will completely withdraw from the fashion industry like the outgoing president of CFDA. After all, he is very interested in the film industry.

So even though Tom Ford itself is a gold lettered signboard, since there is no reliable data on how to distribute Tom Ford's income, and the market scale of the Tom Ford brand has not reached a certain order of magnitude, especially in the categories other than cosmetics and perfume, even if Tom Ford can be successfully purchased, it may not bring the imagined benefits to Kaiyun.