De Meo's Kering sold its beauty unit to L'Oreal for €4bn to cut €9.5bn debt
Two months in, Kering's new CEO unwound his predecessor's beauty pivot — selling Creed and 50-year fragrance rights at roughly what Creed alone had cost.
What was changed
In October 2025 Kering agreed to sell Kering Beauté to L'Oreal for €4 billion ($4.66 billion) — L'Oreal's largest acquisition ever, ahead of Aesop at $2.5 billion. The package included the Creed fragrance house, which Kering had bought for €3.5 billion in 2023, plus exclusive 50-year rights to develop fragrance and beauty for Kering's fashion labels including Bottega Veneta and Balenciaga, and the Gucci license once the existing Coty deal (believed to run to 2028) expires.
The sale was a deliberate reversal by new CEO Luca de Meo, who took over in September 2025 and dramatically accelerated talks with L'Oreal within weeks. Kering had built the beauty division to cut its reliance on Gucci — which generates most of its profits — but the unit reported a €60 million operating loss in the first half of 2025 while Gucci's revenue plummeted 25% year-on-year amid slowing Chinese demand. Net debt stood at €9.5 billion at end-June, on top of €6 billion in lease liabilities, pressuring Kering to deleverage against further credit downgrades.
Bernstein called selling at roughly the price paid for Creed two years earlier 'bitter but necessary medicine'. Alongside the sale, Kering postponed fully acquiring Valentino and aimed to sell real estate stakes for cash. Kering shares rose 4.7% on the announcement (L'Oreal added 1.4%); the deal was expected to close in the first half of 2026, with the two groups also setting up a joint venture for luxury client experiences and services.
Why it worked
Kering carried €9.5bn of net debt plus €6bn in lease liabilities while its profit engine, Gucci, saw revenue fall 25% year-on-year.
The beauty division built in 2023 never scaled: a €60m operating loss in H1 2025 on a bet meant to diversify away from Gucci.
De Meo had promised shareholders 'difficult decisions', and unwinding his predecessor's biggest strategic pivot was the fastest way to raise cash.
Kering's time pressure handed L'Oreal a favourable bargaining position — a €4bn price for assets that cost €3.5bn and were losing money.
What can be applied
Diversification bought at the top is the first thing a deleveraging CEO sells: a division bought for €3.5bn and losing €60m a half-year cannot be rescued while the core brand is shrinking.
Aftermath
The deal was set to close in H1 2026, with proceeds earmarked for debt reduction. L'Oreal gained Creed and half-century licenses on Kering's fashion houses, extending a fragrance business already growing double-digit; Kering continued its cash-raising programme, including postponed Valentino plans and real estate stake sales, while analysts noted the Armani talks question left open for L'Oreal.