(May 22): Puig Brands SA plunged on Friday following the collapse of a proposed combination with Estee Lauder Cos that would have created one of the world’s largest fragrance and skincare companies.
Shares of the Spanish group fell 15% in Madrid, the most on record since the company floated in 2024. The news caught investors by surprise given discussions between the two had been progressing since March.
The proposed multibillion-dollar transaction fell apart due to makeup artist Charlotte Tilbury’s demands regarding her compensation in the deal, according to people familiar with the matter. While both companies separately issued statements saying discussions were over on Thursday, neither elaborated on the reason.
One sticking point was a change-of-control clause held by Tilbury, who sold her eponymous brand to Puig in 2020 but still holds a minority stake, said the people, who weren’t authorised to speak publicly. That wasn’t the only issue that doomed the negotiations, however, one of the people said.
Tilbury didn’t immediately return a message seeking comment.
Wall Street analysts had already expressed scepticism about the tie-up, questioning Estee Lauder’s ability to integrate additional brands during its own turnaround that has already seen the company cut thousands of jobs.
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Estee Lauder shares jumped as much as 16% after the close of regular trading on Thursday following the news. The stock had slumped after the company said it was in talks to buy Puig.
Combined, the companies have a market value of nearly US$39 billion ($49.9 billion) based on closing prices Thursday, with annual sales of around US$20 billion in 2025.
Absent the deal with Puig, Estee Lauder chief executive officer Stéphane de La Faverie is left focusing on reviving the company, which has reported three years of annual sales drops.
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“We are reiterating our confidence in the power of our incredible brands, our talented teams, and our strength as a standalone company,” La Faverie said in a statement.
Estee Lauder’s turnaround plan includes shifting the company’s focus to faster-growing channels like Amazon and TikTok shops, and it has been selling lower-priced items to appeal to younger shoppers.
The company, which is currently second only to L’Oreal in the cosmetics category globally, has seen its shares decline around 25% this year.
For Puig, the aftermath of the deal collapse means the focus is likely to “shift to operating results that may see further top-line slowdown amidst a normalising fragrances market and near-term pressure to the Middle East and travel retail,” Celine Pannuti, an analyst at JP Morgan wrote in a note.
“Management will have to convince on the long-term opportunities and ability to deliver on a standalone basis if the family was willing to sell at multiples well below the average in the beauty sector,” she added.
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