# L’Oreal buys luxury brand Aesop with eye on China
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-04
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: L'Oreal to Acquire Aesop from Natura for $2.53 Billion
Meta Description: L'Oreal's largest brand acquisition to date, with plans for international expansion, including in China. Aesop's growth potential to be
URL: https://financedigest.com/loreal-buys-luxury-brand-aesop-with-eye-on-chinahtml

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By Scott Murdoch and Mimosa Spencer

SAO PAULO/PARIS (Reuters) -France’s L’Oreal has agreed to buy Australian luxury brand Aesop from Natura & Co for an enterprise value of $2.53 billion, growing its presence in high-end cosmetics with an eye to international expansion, including in China.

For L’Oreal, which owns labels ranging from Maybelline to Lancome, the deal is its largest brand acquisition to date, according to Dealogic data.

It provides Brazil’s Natura, owner of Avon and The Body Shop, with some financial relief from shrinking margins and [heavy debt](https://www.financedigest.com/analysis-twitters-massive-revenue-drop-adds-to-heavy-debt-burden.html "Analysis-Twitter’s ‘massive’ revenue drop adds to heavy debt burden").

Aesop taps into all of today’s ascending currents and L’Oreal will contribute to [unleash its massive growth potential](https://www.financedigest.com/unleashing-the-potential-of-apis-for-digital-finance.html "Unleashing the potential of APIs for digital finance"), notably in China and travel retail,” L’Oreal CEO Nicolas Hieronimus said in a statement.

The French cosmetics group is known for buying emerging labels, and scaling them up through its [global distribution capabilities](https://www.financedigest.com/sp-global-acquires-firm-to-bolster-capability-to-track-commodity-shipments.html "S&P Global acquires firm to bolster capability to track commodity shipments"), Ian Simpson, analyst with Barclays, said, estimating Aesop will add around 1.2% to L’Oreal’s organic sales this year.

Given L’Oreal’s strong track record of creating [value from recent acquisitions](https://www.financedigest.com/iris-acquisition-enables-accountants-to-add-greater-value-to-their-clients.html "IRIS acquisition enables accountants to add greater value to their clients"), we expect this transaction to be helpful to sentiment, despite its limited size relative to L’Oreal,” he said.

The brand, Natura’s most profitable, operates almost 400 [stores and posted sales of $537 million](https://www.financedigest.com/sainsburys-pays-524-million-for-full-ownership-of-store-investment-vehicles.html "Sainsbury’s pays 4 million for full ownership of store investment vehicles") in 2022, up 21% in constant currency from a year earlier.

It also [reported double-digit growth](https://www.financedigest.com/russias-rosatom-sees-2022-exports-growth-at-15-report.html "Russia’s Rosatom sees 2022 exports growth at 15% – report") across all its regions last year, and said it had entered the Chinese market “with strong performance that exceeded expectations.

For Natura, the deal is part of a broader organisational shake-up that saw [former chief executive](https://www.financedigest.com/bank-of-england-fines-former-tsb-executive-over-2018-it-failure.html "Bank of England fines former TSB executive over 2018 IT failure") and executive chairman Roberto Marques step down last June to make way for Fabio Barbosa.

Subject to regulatory approvals, the acquisition will be paid in cash, expected in the [third quarter](https://www.financedigest.com/greek-residential-property-price-recovery-picks-up-in-third-quarter.html "Greek residential property price recovery picks up in third quarter") of 2023, Natura said.

Established in 1987, Melbourne-headquartered Aesop offers skin, [hair and body care](https://www.financedigest.com/the-hair-care-market-to-grow-at-an-exponential-substantiation.html "The Hair Care Market to grow at an exponential substantiation") products.

(Reporting by Peter Frontini in Sao Paolo, Scott Murdoch in Sydney and Kane Wu in [Hong Kong](https://www.financedigest.com/hong-kong-finance-official-to-make-first-visit-to-britain-in-three-years.html "Hong Kong finance official to make first visit to Britain in three years"), Mimosa Spencer in Paris; Editing by Sonali Paul, Shri Navaratnam and Barbara Lewis)


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