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Zegna to Buy Tom Ford Fashion Operations

The Italian luxury house Ermenegildo Zegna will take over fashion operations after Estée Lauder Cos.’ multibillion-dollar deal.

Beauty giant Estée Lauder acquired Tom Ford, a global leader in luxury, for US$2.8 billion, with Ermenegildo Zegna NV taking control of the fashion operations through a 20-year licensing agreement with Estée Lauder. Zegna will buy the 85% of Tom Ford International it does not already own part of the deal announced on the 15th of November.

 

TOM FORD BEAUTY

TOM FORD BEAUTY is a luxury beauty brand with a highly differentiated collection of fragrance, makeup, and skin care. Analysts view the brand as strongly positioned in the luxury fragrance and makeup categories, areas that are expected to outperform industry growth over the coming years. The brand has delivered strong double-digit net sales on a compound annual basis from fiscal years 2012 through 2022. In fiscal year ended June 30, 2022, Tom Ford achieved nearly 25% net sales growth as compared to the prior year. The brand continues to have strong momentum across key markets globally, resulting in a prestige fragrance ranking in the top 15 in the United States and top 10 in China. The brand has received over twenty awards from The Fragrance Foundation.

 

ERMENEGILDO ZEGNA

Ermenegildo Zegna N.V is an Italian luxury brand known for its suits for men. It was founded in 1910 and it is owned by Zegna family. Entering a long-term license with Estée Lauder Tom Ford’s fashion operations is a strategic move for Zegna, as it provides the company with a complementary fashion marque to expand its business internationally and reach a new customer base in the US. This has been a key goal for Zegna, as its CEO stated he was looking for ways to expand in the US, following the company’s New York IPO in December last year.

Zegna didn’t disclose the price of the license transaction, which it will finance with cash on hand and which it said will be accretive to earnings per share for Zegna shareholders within the first full year after closing. Zegna had about €350m ($363m) in cash and cash equivalent at the end of June 2022.

 

DEAL & ADVISORS

Estée Lauder will pay about $2.3bn for the Tom Ford brand and all its intellectual property in a deal funded by cash, debt and $300 million in deferred payments, with $250m coming from eyewear manufacturer Marcolin, whose existing license with Tom Ford will be extended. Zegna have not yet disclosed the price of their 20-year licensing agreement for Tom Ford’s fashion operations.

The acquisition is expected to close in the first half of 2023. Perella Weinberg Partners advised Estée Lauder. Goldman Sachs Group Inc. advised Tom Ford, while Zegna received advice from UBS Group AG.

 

Analyst: Alexandrina Ghetiu

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