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French luxury group Kering is selling its beauty division to L'Oréal for 4 billion euros ($4.66 billion), marking a major shift in strategy as the company focuses on reducing debt and investing in high-end wellness ventures.

Announced Sunday, the all-cash deal will see L'Oréal acquire the House of Creed, Kering's prestigious fragrance line, along with long-term licenses to produce and distribute beauty products for Kering-owned fashion labels such as Gucci, Bottega Veneta, and Balenciaga.

The companies said the transaction is expected to close in the first half of 2026, pending regulatory approval, AP News reported.

As part of the agreement, the two French powerhouses will also form a strategic committee to ensure smooth coordination between Kering's fashion brands and L'Oréal's beauty operations.

Both groups said they plan to collaborate beyond cosmetics — exploring potential business ventures in the wellness and longevity market, combining L'Oréal's scientific innovation with Kering's luxury expertise.

Kering's CEO Luca de Meo said the deal represents a major opportunity to expand global reach through partnership rather than competition.

"Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major houses," de Meo said.

"This will allow them to achieve scale and unlock their immense long-term potential, as did Yves Saint Laurent Beauté under L'Oréal's stewardship."

Kering Sells Beauty Division to L'Oréal, Cuts $10.5B Debt

L'Oréal, based in Clichy, France, is already a dominant player in the global beauty market.

CEO Nicolas Hieronimus said the acquisition fits perfectly with the company's strategy of balancing strong heritage brands with rising modern labels.

"Creed is one of the fastest-growing names in niche fragrances," he said. "Gucci, Bottega Veneta, and Balenciaga are exceptional couture brands with enormous potential for growth."

The sale comes as Kering faces pressure to improve financial performance, particularly at its flagship brand Gucci, which has seen slowing demand in China and other major markets.

According to the NY Post, the move will also help Kering trim its $10.5 billion in net debt, easing investor concerns and allowing the company to refocus on its most profitable sectors — fashion, accessories, and luxury experiences.

Under the new structure, L'Oréal will pay Kering ongoing royalties for the use of its brand licenses.

Industry analysts see the partnership as mutually beneficial, giving L'Oréal a stronger foothold in luxury beauty while freeing Kering to invest in wellness-oriented ventures that reflect growing consumer interest in health and longevity.