Melissa Juried Kriebel
Cosmetics major Estée Lauder Companies (EL) said Tuesday that it agreed to acquire fashion brand Tom Ford for the total enterprise value of $2.8 billion.
The amount to be paid by Estée Lauder for the acquisition is about $2.3 billion, net of a $250 million payment to Estée Lauder at closing from Marcolin S.p.A. Estée Lauder expects to fund the transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning in July 2025.
Estée Lauder expects the transaction to be dilutive to adjusted earnings per share 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 earnings per share. The acquisition is expected to close in the first half of calendar 2023.
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.
Estée Lauder noted that the deal will extend and expand the TOM FORD brand’s longstanding relationship with Ermenegildo Zegna N.V. (ZGN) to include a long-term license for all men’s and women’s fashion as well as accessories and underwear. As part of the transaction, Zegna will acquire operations of the TOM FORD fashion business necessary to perform its obligations as licensee.
The brand’s current license with Marcolin, eye-wear manufacturer, will also be substantially extended.
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