The deal values the total Tom Ford enterprise at $2.8 billion.
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 S.p.A. 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.
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.
The deal will also extend and expand the Tom Ford brand’s longstanding relationship with Ermenegildo Zegna N.V. 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.
The brand’s current license with Marcolin, one of the leading global eyewear manufacturers, will also be substantially extended.
Positioning Tom Ford Beauty for Further Growth
Tom Ford Beauty, first introduced by ELC in 2006, is a luxury beauty brand with a highly differentiated collection of fragrance, makeup, and skin care. Established with an initial luxury fragrance, Tom Ford Beauty has since grown into one of the most successful and aspirational beauty brands in the world.
“We are incredibly proud of the success Tom Ford Beauty has achieved in luxury fragrance and makeup and its dedication to creating desirable, high-quality products for discerning consumers around the world,” said Fabrizio Freda, president and chief executive officer, The Estée Lauder Companies. “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.”
Tom Ford Beauty is strongly positioned in the luxury fragrance and makeup categories, areas that are expected to outperform industry growth over the coming years. This strategic acquisition supports the next level of growth for Tom Ford Beauty in key markets for luxury and online channels globally.
The brand has delivered impressive success, including growing strong double-digit net sales on a compound annual basis from fiscal years 2012 through 2022. In ELC’s fiscal year ended June 30, 2022, Tom Ford Beauty achieved nearly 25% net sales growth as compared to the prior year, and over the next couple of years, ELC expects that the brand will achieve annual net sales of one billion dollars. The brand continues to have strong momentum across channels and key markets resulting in a prestige fragrance ranking in the top 15 in the United States and top 10 in China. The brand has received over twenty awards from The Fragrance Foundation.
Comments from Leadership
Tom Ford states, “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.”
Domenico De Sole, co-founder and chairman of Tom Ford International said, “I am delighted with this acquisition. I view The Estée Lauder Companies, the first partner in our Tom Ford journey, as the trusted party to continue the extraordinary legacy of the Tom Ford brand. I thank Tom for his magnificent vision and leadership, and our amazingly talented Tom Ford team for their hard work and commitment to the brand.”
“We are honored that Tom Ford has been part of our ELC family for more than fifteen years, from our first collaboration with the Estée Lauder brand to the launch of Tom Ford Beauty and through its most recent successes,” said William P. Lauder, executive chairman, The Estée 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.”
“Tom Ford, Domenico De Sole and their best-in-class team have established one of the world’s most innovative global luxury brands and we are excited to build its vibrant future,” Freda continued. “Zegna and Marcolin are the ideal long-term licensees for Tom Ford fashion and eyewear. We are thrilled to have the continuity they bring to the brand and their steadfast dedication to quality, luxury and craftsmanship will help us to carry this brand into the future.”