Charlotte Tilbury proved to be a wrinkle too deep in the merger talks between the Estée Lauder Cos. Inc. and Puig, resulting in the latter two calling them off despite being close to signing on the dotted line months ago.
The two companies late Thursday said they have terminated discussions regarding a potential business combination.
One source told WWD that the deal was already complicated, but when it leaked in the Spanish press and the two companies had to publicly confirm that they were in talks on March 23, the negotiations became tougher.
A big part of that was that Charlotte Tilbury, the founder of the makeup brand owned by Puig, hired Rothschild as an adviser and began renegotiating her contract with Puig, according to sources.
The contract negotiations were first reported by the Spanish economic and business publication Expansión earlier this week, which wrote that Tilbury was looking to renegotiate her contract with Puig on terms more favorable to her and potentially exit the company she founded before the pre-determined date of 2031.
One source told WWD: “She remains an important part of the business, she’s CEO, and so she knew that she had leverage and she used it.”
Puig acquired Tilbury’s business in 2020 for an estimated price of 1.2 billion pounds, or around five times revenues. It owns 78.5 percent of the British brand, while Tilbury holds the remaining 21.5 percent.
Per a series of call and put options pegged to the performance of Tilbury’s business, Puig is set to buy Tilbury’s stake and reach 100 percent ownership between now and 2031.
The contract also gives Tilbury the right to trigger the sale of her 21.5 percent stake in a single, immediate transaction. The Spanish newspaper said if Tilbury were to make that move, it would force Puig to pay “several hundred million euros that Estée Lauder would not be willing to assume.”
It turned out that this indeed was a price too high.
As reported in 2024, Puig acquired an additional 5.4 percent of Tilbury’s business for 215 million euros, valuing the business at 4 billion euros. At that same valuation, Tilbury would take home 850 million euros if she were to trigger a full-blown sale.
The contract between Puig and Charlotte Tilbury also includes an earn-out, or deferred payments based on business performance. The newspaper said because of the business’ current performance, she’s not entitled to the earn-out this year.
Reached for comment earlier this week, reps for Lauder, Puig and Charlotte Tilbury declined to comment.
“We are grateful for the conversations we have had with Puig,” said Stéphane de La Faverie, president and chief executive officer of the Estée Lauder Cos. Thursday, confirming talks had ended. “Today, we are reiterating our confidence in the power of our incredible brands, our talented teams, and our strength as a stand-alone company. We are more optimistic than ever about our ability to unlock significant long-term value through Beauty Reimagined, and we remain focused on accelerating that progress.
“We have one of the most powerful portfolios of prestige beauty brands in the world, supported by exceptional equity across categories, geographies, and consumer segments, and we believe we are uniquely positioned to drive sustainable long-term growth globally.”
He added that the company will continue to evaluate and evolve its portfolio to ensure it has the right assets to drive “the most compelling growth opportunities, including both potential acquisitions and divestitures.”
Another factor that sources believe emboldened Lauder to walk away is that it is in a stronger position financially than when the deal talks first came to light.
Third-quarter organic sales grew by 2 percent, with a 10 percent gain in fragrance; adjusted earnings topped estimates, and the company offered an early forecast on fiscal 2027, projecting stronger growth.
Its stock price jumped more than 10 percent in after-hours trading following confirmation that the talks had ended, having closed up 0.9 percent to $78.91. Puig’s stock price ended the day down 0.23 percent at 17.64 euros.
In a statement, Jose Manuel Albesa, CEO of Puig, commented: “We appreciate the meaningful conversations that have taken place with the Estée Lauder Companies. Puig has a strong track record of growth and outperforming the premium beauty market. We remain focused on executing our strategy, delivering profitable growth and prioritizing the interests of all our stakeholders.
“This decision does not change our strategic road map. We continue to build on our strengths in premium beauty, our brand-centric approach, creativity, agility and disciplined growth. We have a distinctive culture that has enabled us to meet all of our commitments since becoming a listed company, including delivering on our growth guidance, improving margins, and strengthening our balance sheet.”
Sources now believe that the end of these talks will make it harder for Puig to find a new partner.
The Lauder portfolio includes Estée Lauder, Clinique, Deciem, Bobbi Brown and Tom Ford, among others, driving sales last year of $14.7 billion, a decline of 3 percent.
And Puig’s portfolio includes the fragrance and fashion brands Rabanne, Carolina Herrera, Jean Paul Gaultier, Nina Ricci and Dries Van Noten. There’s also Charlotte Tilbury, plus niche fragrance brands such as Byredo, Penhaligon’s and L’Artisan Parfumeur, as well as a dermocosmetics activity. Puig recorded net sales of 5.04 billion euros last year.
