In a major business deal worth $4.66 billion, Gucci’s parent company sells its beauty business to L’Oreal.

Gucci owner Kering has agreed to sell its beauty unit to French beauty giant L’Oreal for 4 billion euros (approximately $4.66 billion). This decision was made by Kering’s new CEO, Luca De Meo, who is currently working to reduce debt and shift the company’s focus back to fashion.

Under this deal, L’Oreal will receive a 50-year exclusive license to manufacture Kering’s fragrance brand Creed, as well as fragrances and beauty products under luxury brands such as Gucci, Bottega Veneta, and Balenciaga. The current license for Gucci fragrances is currently held by Coty, and is expected to expire in 2028. A new license will then be in effect.

Kering is in debt

Kering had 9.5 billion euros in debt and 6 billion euros in lease liabilities until June 2025, which had raised investor concerns. This deal is now considered a significant step toward balancing the company’s balance sheet. Kering acquired Creed for 3.5 billion euros in 2023. The company has suffered a 60 million euro loss in its beauty segment.

Falling Gucci Sales Raise Concerns

Gucci, which accounts for a significant portion of Kering’s total income, has been hit by a decline in demand in China. This decline, combined with debt, has put the company under pressure. Upon taking office in September, new CEO Luca De Meo stated that he would have to make some difficult decisions. Consequently, Kering has shelved plans to acquire a full stake in Italian brand Valentino and is now also considering selling real estate assets.

L’Oreal’s largest deal yet

This deal will be L’Oreal’s largest acquisition to date. Previously, the company acquired Australian brand Aesop for $2.5 billion. The deal is expected to close in the first half of 2026.