Estee Lauder ends merger talks with Gaultier owner Puig

Estee Lauder terminated discussions with Puig about a potential fashion and beauty combination valued at nearly $40bn. The companies could not reach agreement on how the merged entity would be structured, including which controlling families would hold the balance of power and how board seats would be allocated. Compensation demands, including those associated with Charlotte Tilbury, were also reported as a sticking point. Estee Lauder stated it remained confident in its brands, teams, and strength as a standalone company. The talks had previously hurt investor sentiment, with Estee Lauder’s market value falling by about a fifth after the talks became public. Shares rose in post-market trading after the termination news.

"Estee Lauder has ended merger talks with its Spanish rival Puig to create a fashion and beauty retailer worth almost $40bn (30bn/34.5bn) after failing to agree which would hold the balance of power in the combined group. Estee Lauder said on Thursday the parties have terminated discussions regarding a potential business combination. The talks, which were first revealed in March, failed to progress to an agreement on how the final merged entity would be structured."

"Sticking points included the issue of which of the two families that control the fashion and beauty giants would hold the balance of power and the allocation of board seats, according to the Financial Times. Bloomberg reported that another bone of contention had been the level of compensation demanded by Tilbury, one of the UK's richest beauty entrepreneurs."

"Stephane de La Faverie, the chief executive at Estee Lauder, said: We are grateful for the conversations we have had with Puig. Today, we are re-iterating our confidence in the power of our incredible brands, our talented teams and our strength as a standalone company. The talks had not been popular with Estee Lauder investors with its market value falling by about a fifth after they were made public."

"On Thursday Estee Lauder's shares climbed by 11.5% in post-market trading as investors welcomed the news they had been terminated. The Lauder family controls the company, which was founded in 1946, through a dual class voting structure, owning about 38% of shares, but indirectly or directly has more than 80% of voting power."

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