Estee Lauder Companies to acquire American brand Tom Ford for $2.8 bn

The deal values the total enterprise at $2.8 billion. The amount to be paid by ELC for the acquisition is approximately $2.3 billion, net of a $250 million payment to ELC at closing from Marcolin, which is entering into a license agreement for Tom Ford eyewear. ELC expects to fund this transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning in July 2025, it said in a media release.

The deal will extend and expand the Tom Ford brand’s longstanding relationship with Ermenegildo Zegna to include a long-term license for all men’s and women’s fashion as well as accessories and underwear. As part of this transaction, Zegna will acquire operations of the Tom Ford fashion business necessary to perform its obligations as licensee. ELC and Zegna will align closely on the creative direction to continue building on the luxury positioning of the Tom Ford brand.

Under the agreement, Tom Ford, founder and CEO of Tom Ford International, will continue to serve as the brand’s creative visionary 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.

ELC’s benefits include securing the long-term cash flow from owning the Tom Ford Beauty brand beyond the existing license expiration in 2030. ELC expects this transaction to be dilutive to adjusted diluted earnings per share (EPS) in fiscal 2023 by ($0.05) to ($0.15), primarily from one time acquisition-related costs. For fiscal 2024, the transaction is anticipated to be roughly neutral to adjusted diluted EPS. The acquisition is subject to certain conditions, including regulatory approvals, and is expected to close in the first half of calendar 2023.

Tom Ford stated, “I could not be happier with this acquisition as The Estee 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.”

“We are honored that Tom Ford has been part of our ELC family for more than fifteen years, from our first collaboration with the Estee Lauder brand to the launch of Tom Ford Beauty and through its most recent successes,” said William P Lauder, executive chairman, The Estee 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 have been partners and shareholders of the Tom Ford fashion business since its inception. 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,” said Ermenegildo ‘Gildo’ Zegna, CEO of Ermenegildo Zegna Group.

Fibre2Fashion News Desk (KD)