Kering's Strategic Shift: Luca de Meo's Bold Move with L'Oreal

Kering's new CEO Luca de Meo has accelerated the sale of the company's beauty business to L'Oreal, marking a strategic shift from his predecessor's vision. This deal, driven by personal corporate relationships, allows L'Oreal to secure major beauty licenses, including Gucci's. Kering aims to reduce its high net debt through this transaction.

Kering's new CEO, Luca de Meo, has quickly stamped his authority by expediting the sale of the luxury group's beauty business to L'Oreal. The transaction, finalized on Monday, diverges markedly from prior strategic plans and is poised to create ripples across the beauty and luxury sectors.

Preliminary discussions with L'Oreal had begun in the spring before de Meo's tenure, but negotiations gained momentum after his appointment in September. The move was partly fueled by the presence of other potential suitors, including Spanish beauty firm Puig, which the CEO ultimately overlooked in favor of L'Oreal due to its financial heft and streamlined offer.

De Meo's decision underscores a shift from the diversification strategies championed by his predecessor, François-Henri Pinault. This deal aligns Kering with L'Oreal's vast ecosystem, facilitating Gucci's major beauty licenses. The restructuring serves a dual purpose for Kering—streamlining operations while addressing significant net debt pressures.

(With inputs from agencies.)