Estée Lauder ends merger talks with Gaultier owner Puig

The US cosmetics company Estée Lauder has ended talks with its Spanish rival Puig about a merger that would have created a fashion and beauty group worth almost $40bn (£30bn).

Estée Lauder, one of the world’s biggest manufacturers of skincare, makeup and fragrances, owns brands including Clinique, Bobbi Brown and Tom Ford Beauty.

Puig, which floated on the Madrid stock market two years ago, owns labels including Jean Paul Gaultier, Charlotte Tilbury, Carolina Herrera and Dries van Noten.

Estée Lauder said on Thursday that “the parties have terminated discussions regarding a potential business combination”.

The talks, first reported in March, stalled over disagreements about how the merged entity would be structured.

A key bone of contention, first reported by the Spanish newspaper Expansión, was the level of compensation demanded by Tilbury, one of the UK’s richest beauty entrepreneurs.

Puig took a majority stake in her brand in 2020 for a reported $1.2bn, and two years ago extended its deal leaving Tilbury a minority stake with plans to take full ownership in 2031.

The deal with Puig would have included a change of control clause allowing Tilbury to potentially sell her stake. The prospect and value of this became a stumbling block in the talks between Puig and Estée Lauder, according to a source close to the deal.

Other factors played into the deal not getting over the line, but it is understood the issue relating to Tilbury was the biggest obstacle.

The Estée Lauder chief executive, Stéphane de La Faverie, said: “We are grateful for the conversations we have had with Puig. Today, we are reiterating our confidence in the power of our incredible brands, our talented teams and our strength as a standalone company.”

The talks had not been popular with Estée Lauder investors. Its market value fell by about a fifth after the discussions became public. Its shares climbed by 11.5% in post-market trading on Thursday as investors welcomed the news that the discussions had been terminated.

The Lauder family controls the company, which was founded in 1946, through a dual-class voting structure. Although it owns about 38% of shares, it indirectly or directly has more than 80% of voting power.

Shares in Puig, which had fallen almost 30% since its €13.9bn (£12bn) flotation in 2024, rose 15% when the potential merger was announced. The company’s shares plunged by the same amount after the termination of the talks.

The Puig family, which founded the business 110 years ago, continues to control most of the voting rights.

The Puig chief executive, José Manuel Albesa, said on Thursday that the company appreciated “the meaningful conversations”.

“This decision does not alter our strategic roadmap,” he said. We will continue to take a highly selective and value-focused approach to mergers and acquisitions in order to further complement our portfolio.”

Puig struck 11 deals to buy fragrance and fashion brands between 2011 and 2024.

The Barcelona-based company announced the appointment of Albesa as its first chief executive from outside the Puig family in February. He succeeded Marc Puig, who had led the business since 2004 and remains the executive chair.

Charlotte Tilbury was approached for comment. The former celebrity makeup artist founded her brand in 2013. She topped last year’s inaugural Sunday Times beauty rich list with an estimated fortune of £350m.