L’Oreal buys Australian owned Aesop skincare maker for $2.25bn

The transaction caps months of negotiations as other companies, including private equity firm Permira and Chinese investment firm Primavera Capital also showed interest in the Australian brand.

French skincare giant L’Oréal has agreed to acquire luxury cosmetics brand Aesop, which was founded in Melbourne before developing a cult global following, for $2.53bn (€2.32bn).

The transaction caps months of negotiations as other companies, including private equity firm Permira and Chinese investment firm Primavera Capital also showed interest in the Australian brand, owned by Brazil’s Natura & Co, people familiar with the matter told Bloomberg last month.

At L’Oreal, Aesop joins a cast of luxury brands such as Lancôme and Yves Saint Laurent as the French company bets on a continued drift toward high-end cosmetics.

L’Oreal bought Skinbetter Science, a US maker of skincare creams distributed via doctors, in recent months to boost another high-end segment it calls “active cosmetics,” with brands like as La Roche-Posay and SkinCeuticals.

The company’s luxury unit surpassed its mass-market division two years ago to become the group’s largest, and L’Oreal expects the trend to continue. Aesop also brings a focus on clean, sustainable ingredients that can appeal to young consumers, said Bernstein analyst Bruno Monteyne.

For the Brazilian beauty firm Natura, the transaction will help cut debt and focus on turning around other businesses. Natura’s US depository receipts surged as much as 15% in late trading after the deal was announced.

Aesop opened two stores in China recently and they’ve become the brand’s top sellers worldwide, underscoring its potential there, according to Rogerio Fujimori, an analyst at Stifel.

- Bloomberg