L’Oréal is buying Australian brand Aesop in a deal that values it at $2.5 billion, in the biggest brand acquisition ever made by the French beauty giant.
The sale was announced by Aesop’s parent, Brazilian firm Natura & Co, which also owns The Body Shop and Avon.
It brings Aesop, which is known for its luxury skin and body care products, under the same umbrella as brands such as Garnier and Maybelline.
The deal would be L’Oréal’s largest acquisition of another brand on record, followed by its $1.7 billion purchase of YSL Beauté in 2008, according to data from Dealogic.
Natura & Co bills itself as Brazil’s largest beauty and cosmetics company, operating in more than 100 countries. Bank of America and Morgan Stanley advised Natura on the deal. With the move, the company will offload significant debt, as well as seek to grow other brands.
“With a strengthened financial structure and a deleveraged balance sheet, Natura & Co, exercising strict financial discipline, will be able to sharpen its focus on its strategic priorities, notably our investment plan in Latin America,” the firm’s CEO Fabio Barbosa said. He noted that improving business for both The Body Shop and Avon brands, in particular, will be key for the company moving forward. “We are confident that Aesop’s growth story will continue under the ownership of L’Oréal and wish Aesop continued success in this new chapter,” he said.
Aesop was founded in Melbourne, Australia in 1987. Natura picked up a 65% stake in the company in 2012, and formally acquired it in 2016.
Since then, Aesop’s sales have skyrocketed nearly 20 times — from $28 million in 2012 to $537 million in 2022, according to Natura. Over the past year, Aesop posted double-digit growth in revenue.
The company sells its products, which include exfoliating hand wash, scented body lotions and incense kits, in 29 markets. The brand is hoping to push further into mainland China especially, where it opened its first brick-and-mortar stores last year. Aesop CEO Michael O’Keefe called the deal “the next phase of development” for the brand, adding that the partnership will allow Aesop to bring its “exceptional skincare products to even more people and continue to expand our brand globally.”
Centerview was the sole advisor for L’Oréal on the deal. Picking up such a well-established brand is a shift, but L’Oréal appears to be banking on continued interest in high-end cosmetics. Aesop emphasizes clean, sustainable ingredients, which is of interest to younger shoppers. It’s a trend that’s expected to continue. The brand joins the likes of Lancôme and Yves Saint Laurent at the company. “Aesop taps into all of today’s ascending currents,” L’Oréal CEO Nicolas Hieronimus said in the statement. “L’Oréal will contribute to unleash its massive growth potential, notably in China and travel retail.”
The French cosmetics group is known for buying emerging labels, and scaling them up through its global distribution network, Ian Simpson, analyst with Barclays, said, estimating Aesop will add around 1.2% to L’Oreal’s organic sales this year.
