Kering’s shares have soared following the luxury player selling its beauty division to L’Oréal for €4bn.
The “long-term strategic partnership” will see the French beauty giant acquire Kering Beauté, which includes House of Creed and the beauty and fragrance licenses of Houses of Kering.
L’Oréal is also set to take the helm in pursuing new opportunities in the field of wellness and longevity through the newly acquired beauty division.
The deal, which is set to complete in the first half of 2026, will be headed up by a strategic committee to ensure coordination between the brands.
“This strategic alliance marks a decisive step for Kering,” said Luca de Meo, CEO of 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.”
The partnership also includes the rights to enter into a 50-year exclusive license for the creation, development, and distribution of fragrance and beauty products for Gucci.
This will commence after expiration of the current license with Coty, Kering stated.
“I am delighted to forge this long-term strategic alliance with one of the world’s most prestigious, creative and visionary luxury groups,” said Nicolas Hieronimus, CEO of L’Oréal Groupe.
“This partnership will further solidify our position as the world’s [number one] luxury beauty company and allow us to explore new avenues in wellness together.”
“The addition of these extraordinary brands perfectly complements our existing portfolio and significantly expands our reach into new, dynamic segments of luxury beauty.”
L’Oréal also said the deal will help it double its focus on the niche fragrance market.
Hieronimus added: “Gucci, Bottega Veneta and Balenciaga are all exceptional couture brands with enormous potential for growth.”
The move comes as a surprise, with Kering having doubled down on its beauty division over the past year, following the issuance of a €750m single-tranche bond in May 2025 to enhance its financial flexibility.
The French conglomerate established its beauty division in 2023 to develop the beauty arms for its Bottega Veneta, Balenciaga, Alexander McQueen, Pomellato and Qeelin houses.
It then acquired luxury fragrance house Creed in June that year for a reported US$3.8bn.
The sale of Kering’s beauty division to L’Oréal follows a lacklustre half year of trading in 2025, with revenues sinking 16% to €7.6bn after it took a nearly €1bn hit from Gucci.
This was offset slightly by Kering Beauté, the conglomerate’s beauty arm, which bucked the downturn in income as first-half revenues rose 9% to €150m.