Paris:French luxury group Kering has agreed to sell its beauty division to L’Oréal for 4 billion euros, or approximately $4.66 billion, in a major strategic move under new CEO Luca de Meo. The deal aims to reduce Kering’s debt of 9.5 billion euros and allow the company to focus more on its core fashion business.

The transaction includes Kering’s fragrance brand Creed and gives L’Oréal exclusive 50-year licenses to develop beauty and fragrance products under Kering’s fashion labels, including Gucci, Bottega Veneta, and Balenciaga. The Gucci fragrance license, currently held by Coty, will transfer to L’Oréal when it expires in 2028.

This sale marks a reversal of the strategy introduced by former CEO François-Henri Pinault, who had built Kering’s beauty division after acquiring Creed for 3.5 billion euros in 2023.

Despite the acquisition, the beauty unit struggled with operating losses and could not offset declining sales at Gucci, particularly in the Chinese market.

Financial analysts say the divestment is expected to ease investor concerns over Kering’s high debt and long-term lease liabilities totaling 15.5 billion euros, while improving capital efficiency.

For L’Oréal, the deal is its largest acquisition to date, surpassing the 2023 purchase of Australian brand Aesop for 2.5 billion dollars. The transaction is expected to close in the first half of 2026 and will strengthen L’Oréal’s position in the luxury beauty market.