Interview Synopsis

Estée Lauder – potential Tom Ford acquisition

  • Public Equity
  • Consumer
  • North America

Last month it was reported that cosmetics company Estée Lauder is in talks to acquire Tom Ford for USD 3bn.* According to a former executive at the company, acquiring the luxury fashion house could act as a “stepping stone” for Estée Lauder into key markets in China, the Middle East and India.

Estée Lauder acquisition of Tom Ford a “stepping stone” into APAC market

In an Interview with Third Bridge Forum, the specialist said Estée Lauder already has a licensing agreement with Tom Ford but it “does not make much money” from it. However, acquiring the company grants it licensing ownership, enabling it to use its formulas across multiple brands and generate more revenue. Tom Ford has already penetrated a number of global regions and has “huge” demand in Asia, according to the specialist. They believe Tom Ford can continue to grow in the region, and the acquisition could help with Estée Lauder’s focus of entering key growth markets in APAC and the Middle East. 

The specialist said the potential acquisition could be a market disruptor, given the product configuration at Tom Ford. They said the move could eventually see Estée Lauder become similar to LVMH, which the specialist believes is the company’s goal. However, they also said this could take 10 years to achieve. 

Meanwhile, we heard that China is a market Estée Lauder is watching “like a hawk”. Chinese consumers are highly attracted to luxury brands, the specialist said, and the company’s legacy brands like La Mer, Caudalie and Clinique continue to grow in this market. The country is also an important cog in Estée Lauder’s supply chain, with most of its packaging coming from the country. But the specialist warned that economic and political “disruptions” in the region could cause supply chain disruption. 

China can also be a challenging market in terms of regulation, the specialist told us. China still requires animal testing as a prerequisite to selling cosmetics in the country, which differs from Estée Lauder’s current credo, we heard. The specialist said conducting animal testing to enter the Chinese market could alienate US consumers who are more concerned with these issues. 

Over the next 3-5 years, the specialist expects Estée Lauder’s legacy brands to continue attracting new consumers. They also expect the company will grow through “strategic acquisitions”. The company could also move forward with plans to capture further market share in China, India and the Middle East – at which point it will have “captured the globe”. 

The specialist is also “excited” to see if Estée Lauder can acquire Tom Ford. They said while many acquisitions do not work and Tom Ford’s fashion business could dissolve as a result of the move, the deal could be “groundbreaking” for the industry if Estée Lauder can pull it off. 

Click here to access all the human insights in Third Bridge Forum’s “Estée Lauder – Portfolio Positioning & Potential Tom Ford Acquisition” Interview.


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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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