Estée Lauder to acquire Tom Ford luxury fashion brand for $2.8bn

The Estée Lauder Companies (ELC), an American cosmetics company, has agreed to acquire the Tom Ford luxury brand and all its intellectual property for a total enterprise value of $2.8 billion.

Under the proposed deal, Ermenegildo Zegna Group and Italian eyewear manufacturer Marcolin will enter long-term license agreements for Tom Ford fashion and Tom Ford eyewear, respectively.

The Tom Ford brand, which was founded by American fashion designer and filmmaker Tom Ford, offers a collection of menswear, womenswear, eyewear, accessories, beauty, timepiece, and underwear.

Tom Ford said: “I could not be happier with this acquisition as The Estée 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.”

Estée Lauder will pay approximately $2.3 billion for the acquisition while Marcolin will pay $250 million to the New York-based beauty firm at closing.

The American cosmetics company is expected to secure the long-term cash flow from the acquisition of Tom Ford brand beyond the expiration of the existing license in 2030 and the removal of royalty payments on beauty after the deal closes along with new licensing revenue streams and further online penetration.

Fabrizio Freda — The Estée Lauder Companies President and CEO said: “As an owned brand, this strategic acquisition will unlock new opportunities and fortify our growth plans for Tom Ford Beauty.

“It will also further help to propel our momentum in the promising category of luxury beauty for the long-term, while reaffirming our commitment to being the leading pure player in global prestige beauty.”

The brand’s current license with Marcolin will also be extended following the transaction.

Subject to certain conditions and regulatory approvals, the transaction is expected to close in the first half of 2023.

Ermenegildo Zegna and Marcolin are the long-term licensees for Tom Ford fashion and eyewear, respectively.