Gucci owner Kering to sell beauty unit to L’Oreal in £3.5bn deal

Gucci owner Kering has agreed to sell its beauty business to L’Oreal for four billion euro (£3.5 billion), as the two French businesses join forces to tap into broader markets.

Luxury fragrance brand House of Creed will become part of the L’Oreal Luxe division under the deal, joining the likes of Yves Saint Laurent, Armani, and Prada’s beauty ranges.

L’Oreal will also gain a 50-year licence agreement to create beauty and fragrance products for Kering brands Gucci, Bottega Veneta and Balenciaga.

The deal is valued at four billion euro (3.5 billion), the firms said, with the transaction expected to be made during the first half of 2026.

Kering said the tie-up with L’Oreal will help grow the beauty ranges of its global luxury brands.

Chief executive Luca de Meo said: “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 Beaute under L’Oreal’s stewardship.”

Nicolas Hieronimus, chief executive of L’Oreal Group, said: “The addition of these extraordinary brands perfectly complements our existing portfolio and significantly expands our reach into new, dynamic segments of luxury beauty.

“Through Creed, we will establish ourselves as one of the leading players in the fast-growing niche fragrance market.

“Gucci, Bottega Veneta and Balenciaga are all exceptional couture brands with enormous potential for growth.”

Russ Mould, investment director at AJ Bell, said: “Beauty and wellness are markets with significant untapped potential, and L’Oreal and Kering are teaming up to try and take advantage of this opportunity.

“For Kering, this is the first big move on the part of new chief executive Luca de Meo, as he seeks to turn around the fortunes of the struggling luxury goods firm.”

Kering recently revealed its sales were down by 16% over the first half of 2025, compared with the prior year, with Gucci revenues dropping by about a quarter.

The company’s net debt stood at 9.5 billion euro (£8.3 billion) at the end of June.

Mr Mould said the deal with L’Oreal will give it access to the French rival’s logistics capabilities and help it to “make a meaningful dent in its onerous borrowing pile”.