L'Oréal announced the largest acquisition to date under CEO Nicolas Hieronimus last week of Aesop, an Australian luxury skincare brand. The deal worth $2.5 billion is expected to close in the third quarter of this year, pending regulatory approval. With such a high price tag, it is evident that L'Oréal has plans to increase its expansion and presence in the high-end, natural beauty product space.
Known for its premium soaps and distinctively fragranced skincare products, Aesop has developed a loyal consumer base, who love the brand not only for its minimalist aesthetic, but also its vegan, clean beauty ethos. Its distinctive dark glass bottles, monochrome packaging and concept-led store designs have allowed it to stand out from other brands and generate a healthy gross margin of around 87%, higher than L’Oréal’s average of 72%.
In a statement by L'Oréal’s CEO Nicolas Hieronimus, he claimed that the acquisition of Aesop was "a major step forward in our strategy to accelerate our growth in the high-end beauty market." He added that Aesop was "a perfect fit for L'Oréal," as it shared the company's "commitment to innovation, excellence, and sustainability."
This deal is a sign of L'Oréal's commitment to sustainability, which is becoming increasingly important to consumers. It will be interesting to see how L'Oréal integrates Aesop into its existing business as they work together to strengthen the intersection of luxury and clean beauty.