Paris – French luxury conglomerate Kering, owner of major brands including Gucci, Bottega Veneta, and Balenciaga, has announced the sale of its beauty business to French cosmetics giant L'Oréal for €4 billion (approximately $4.27 billion).

The deal includes the acquisition of the fragrance brand Creed by L'Oréal, along with a 50-year exclusive license to develop beauty products for Bottega Veneta and Balenciaga.

The strategic divestment is primarily aimed at reducing Kering’s substantial net debt, which stood at €9.5 billion as of June. The move follows a difficult period for the group, marked by a 46% year-on-year drop in first-half net profit and a significant 26% decline in sales for its flagship brand, Gucci, particularly impacted by reduced demand in the crucial Chinese market.

This transaction is the first major strategic move by the newly appointed CEO, Luca de Meo, who stated that partnering with a global beauty leader will accelerate the development of perfumes and cosmetics for Kering’s key brands, enabling them to realize their long-term potential in the sector.