Following the news that Estée Lauder will acquire designer fashion house Tom Ford for $2.8 billion;

Lia Neophytou, Senior Health & Beauty Analyst at GlobalData, a leading data and analytics company, offers her view:

“Estée Lauder, which was the second largest company in the global beauty* market last year according to GlobalData, has improved its proposition with its acquisition of Tom Ford. This purchase will enable it to better compete with market leader L’Oréal, which is set on expanding its technological capabilities to improve its beauty offering.

“Estée Lauder wouldn’t have wanted to risk Tom Ford going to a competitor, seeing as it has lucratively licensed the brand’s fragrances and cosmetics for over a decade. While it is a huge investment to make in times of unprecedented inflation and macroeconomic challenges, it will allow Estée Lauder to be more profitable in the long run as Tom Ford’s sole owner.

“Tom Ford’s strong beauty and fragrance portfolio is arguably in better hands with Estée Lauder, as opposed to reported rival bidder Kering, as it has historically focused its expertise exclusively on cultivating high-end beauty and fragrance brands. However, Estée Lauder is wise to partner with Zegna as a long-term licensee for Tom Ford’s fashion and accessories, as, unlike Kering, Estee Lauder significantly lacks in apparel expertise.”

*The beauty market refers to the skincare, makeup, and fragrance sectors