By Gary Symons
TLL Editor in Chief
Estée Lauder is making a move into the fashion world, as the company has initiated talks to acquire Tom Ford International.
Estee Lauder is best known as a leader in the world of cosmetics and fragrance, but a deal with Tom Ford could put it into an elite realm in the fashion sector as well.
There are other parties competing to acquire the luxury fashion icon, but according to a story first reported in the Wall Street Journal, Estée Lauder is considered the front-runner, and has been in negotiations with Tom Ford for at least three weeks.
The fashion firm has actively been looking for a buyer, with the help of the investment bank Goldman Sachs. The Journal’s sources said the asking price is in the realm of $3 billion.
None of the parties involved have spoken publicly about the potential deal, and the news to date has been based on the newspaper’s unnamed, inside sources.
That said, most industry insiders think a deal between the fashion icon and the cosmetic giant makes a lot of sense, as the two companies have had a longtime licensing partnership through subsidiaries Tom Ford Beauty and Jo Malone.
Lauder’s chief financial officer Tracey Thomas Travis said at a recent conference, “Tom Ford and Jo Malone are two of our largest midsized brands that are knocking on the door of being over that $1 billion threshold to be large brands over the next couple of years.”
Travis also said the fragrance business that Tom Ford has excelled at is a merger and acquisition opportunity for Estée Lauder.
In fact, according to the company’s most recent earnings report, fragrance net sales increased for the quarter, primarily driven by Jo Malone London, Tom Ford Beauty, Le Labo and Estée Lauder, and came in at approximately $107 million, combined.