Transaction values Tom Ford at $2.8 billion
Ermenegildo Zegna Group and Marcolin S.p.A.
enter long-term license agreements for TOM FORD fashion and TOM
FORD eyewear, respectively
The Estée Lauder Companies Inc. (NYSE: EL) announced today that
it has signed an agreement to acquire the TOM FORD brand, a global
leader in luxury. The transformational deal will establish its
longstanding partner, The Estée Lauder Companies (“ELC”), as the
sole owner of the TOM FORD brand and all its intellectual
property.
Under the stewardship of ELC, the purchase of the TOM FORD brand
and the extension of its current licensing partners will allow for
continuity and the further evolution of the TOM FORD brand as one
of the preeminent global luxury brands of the twenty-first
century.
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. (“Marcolin”). 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.
ELC’s benefits include securing the long-term cash flow from
owning the fast-growing TOM FORD BEAUTY brand beyond the existing
license expiration in 2030 and the elimination of royalty payments
on beauty upon closing, as well as new licensing revenue streams
and other anticipated synergies. These synergies include creative
oversight, increased speed and agility, and opportunities for
further online penetration. ELC expects this transaction to be
dilutive to adjusted diluted earnings per share (“EPS”) 1 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 diluted EPS. The
acquisition is subject to certain conditions, including regulatory
approvals, and 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.
The deal will extend and expand the TOM FORD brand’s
longstanding relationship with Ermenegildo Zegna N.V. (NYSE: ZGN)
(“Zegna”, or “Zegna Group”) 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, known for its superior craftsmanship
and quality will also be substantially extended.
TOM FORD BEAUTY, first introduced by ELC in 2006, is an iconic
luxury beauty brand with a highly differentiated collection of
fragrance, makeup, and skin care that reflects Tom Ford’s singular
vision of modern glamour, crafted with ultimate quality.
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, we expect 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.
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.”
“We are committed to driving the continued success of TOM FORD
BEAUTY, and this exciting acquisition strategically positions us
for future growth,” said Guillaume Jesel, President, Luxury
Business Development, The Estée Lauder Companies. “Tom Ford is a
true visionary and the ultimate architect of luxury. Together with
the legendary Domenico De Sole, they have created a remarkable new
world of luxury. It is an honor to continue to lead the brand and
the exceptionally talented team, and manifest Tom Ford’s
extraordinary vision of luxury beauty and beyond.”
“We have been partners and shareholders of the TOM FORD fashion
business since its inception. This transaction is the first since
our listing in December 2021, and confirms our commitment to
leverage our platform to create value for all of our stakeholders,”
said Ermenegildo “Gildo” Zegna, CEO of Ermenegildo Zegna Group. “We
have been so inspired by the incredible talent at TOM FORD and are
delighted to embark on this powerful and enriching relationship
with The Estée Lauder Companies.”
“It has been an incredible journey over the last two decades to
establish the TOM FORD eyewear business among the global leaders of
unparalleled quality and style. We are thrilled to work with The
Estée Lauder Companies with our exclusive and perpetual license for
the brand, which will allow us to further support the growth of
this amazing brand,” said Fabrizio Curci, Chief Executive Officer
of Marcolin S.p.A.
“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,” Mr. 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.”
In this transaction, Perella Weinberg Partners LP served as
financial advisor to The Estée Lauder Companies Inc., and Paul,
Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel.
Goldman Sachs & Co. LLC served as sole financial advisor to TOM
FORD and Skadden, Arps, Slate, Meagher & Flom LLP served as
legal counsel. Zegna received financial advice from UBS. Latham
& Watkins LLC served as legal counsel to Marcolin.
About The Estée Lauder Companies Inc.
The Estée Lauder Companies Inc. is one of the world’s leading
manufacturers, marketers, and sellers of quality skin care, makeup,
fragrance, and hair care products. The company’s products are sold
in approximately 150 countries and territories under brand names
including: Estée Lauder, Aramis, Clinique, Lab Series, Origins,
M·A·C, La Mer, Bobbi Brown, Aveda, Jo Malone London, Bumble and
bumble, Darphin Paris, TOM FORD BEAUTY, Smashbox, AERIN Beauty, Le
Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS,
Too Faced, Dr.Jart+, and the DECIEM family of brands, including The
Ordinary and NIOD.
About TOM FORD
In April 2005, Tom Ford announced the creation of the TOM FORD
brand. Ford was joined in this venture by former Gucci Group
President and Chief Executive Officer Domenico De Sole, who serves
as Chairman of the company. In that same year, Ford announced his
partnership with Marcolin Group to produce and distribute optical
frames and sunglasses, as well as a partnership with Estée Lauder
to create the TOM FORD beauty brand. In April 2007, Ford’s first
directly owned flagship store opened in New York on Madison Avenue
which coincided with the debut of the TOM FORD menswear and
accessory collections. In September 2010, during an intimate
presentation at his Madison Avenue flagship, Ford presented his
highly-anticipated womenswear collection. In February 2018, Ford
debuted TOM FORD timepieces and the much anticipated underwear
collection for the first time on the runway. Today, the brand
offers a complete collection of menswear, womenswear, accessories,
eyewear, beauty and most recently underwear and timepieces.
Presently there are over 100 freestanding TOM FORD stores and
shop-in-shops in locations such as: London, Milan, New York,
Beverly Hills, Miami, Las Vegas, Tokyo, Osaka, Seoul, Montreal,
Toronto, Hong Kong, Shanghai, Beijing, New Delhi, Xian, Doha,
Kuwait City, Riyadh and Sydney.
About Ermenegildo Zegna Group
Founded in 1910 in Trivero, Italy by Ermenegildo Zegna, the
Zegna Group designs, creates, and distributes luxury menswear and
accessories under the Zegna brand, as well as womenswear, menswear
and accessories under the Thom Browne brand. Through its Luxury
Textile Laboratory Platform – which works to preserve artisanal
mills producing the finest Italian fabrics –the Zegna Group
manufactures and distributes the highest quality fabrics and
textiles. Group products are sold through over 500 stores in 80
countries around the world, of which 299 are directly operated by
the Group as of September 30, 2022 (242 Zegna stores and 57 Thom
Browne stores). Over the decades, Zegna Group has charted Our Road:
a unique path that winds itself through era-defining milestones
that have seen the Group grow from a producer of superior wool
fabric to a global luxury group. Our Road has led us to New York,
where the Group has been listed on the New York Stock Exchange
since December 20, 2021. And while we continue to progress on Our
Road to tomorrow, we remain committed to upholding our founder’s
legacy – one that is based upon the principle that a business’s
activities should help the environment. Today, the Zegna Group is
creating a lifestyle that marches to the rhythm of modern times
while continuing to nurture bonds with the natural world and with
our communities that create a better present and future.
About Marcolin
Marcolin is a worldwide leading company in the eyewear industry
founded in 1961, known for its unique ability to combine
craftsmanship with advanced technologies through the constant
pursuit of excellence and continuous innovation. The brand
portfolio includes: TOM FORD, Guess, WEB Eyewear, adidas Sport,
adidas Originals, Bally, Moncler, Max Mara, Sportmax, Zegna,
Longines, OMEGA, GCDS, Barton Perreira, Tod's, Pucci, BMW,
Swarovski, MAX&Co., Kenneth Cole, Timberland, GANT,
Harley-Davidson, Marciano, Skechers and Candie’s. Through its own
direct network and global partners, Marcolin distributes its
products in more than 125 countries.
The forward-looking statements in this press release, including
those in the quoted remarks and those relating to the closing of
the transactions and benefits and other expectations for TOM FORD
and TOM FORD BEAUTY involve risks and uncertainties. Factors that
could cause actual results to differ from those forward-looking
statements include current economic and other conditions, including
volatility, in the global marketplace, actions by retailers,
suppliers and consumers, competition, the transition and ongoing
success of the collaborative relationship of the parties,
contingencies set forth in the various transaction agreements, the
abilities to implement the forward business plans, and those risk
factors described in ELC’s annual report on Form 10-K for the year
ended June 30, 2022.
ELC-C
1 Adjusted diluted earnings per share excludes restructuring and
other charges.
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version on businesswire.com: https://www.businesswire.com/news/home/20221115006456/en/
Investors: Rainey Mancini rmancini@estee.com
Media: Jill Marvin jimarvin@estee.com
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