Estee Lauder is set to buy Tom Ford for $2.8 billion
Estee Lauder has made one of their biggest acquisitions to date, setting Tom Ford off as a billionaire after signing a $2.8 billion dollar deal with the company. The beauty firm has already taken full ownership of Torm Ford through license ownerships of all fragrances and cosmetics, which they have beat off competition from Gucci owner Kering SA to clinch the deal. Known to be one of the biggest deals to have happened in the luxury space this year, this deal has made the cosmetics giant the sole owner of the Tom Ford brand. It was announced that Mr. Ford’s stay with the brand has come to an end, in which his future role after that is still to unknown. Tom Ford has been a part of the ELC company for more than 15 years, from their first collaboration with the Estee Lauder brand till the brand’s launch of the Tom Ford Beauty. William P Lauder, Executive Chairman of Estee Lauder companies, commended ELC and Tom Ford for their creativity, entrepreneurial spirit, and a commitment to excellence that continues to fuel the company's brand name.
Coming to know the brand’s history with Tom Ford, the company’s background is the most important in understanding the brand’s greatness. Owner of the luxurious brand , Mr. Tom Ford has a great history within the luxurious space. His history begins in the late 80s, during this time he worked as an assistant designer for Cathy Hardwick, two years later he began designing jeans for Perry Ellis. In the year 1990 the designer was hired as a Womenswear Designer for Gucci by then Gucci’s creative director Dawn Mello. Gucci was a brand plagued by management infighting and perceived to be out of touch with the times. With this, Mr. Ford rose through the ranks, and just four years later the brand was acquired by the Bahrain-based Investcorp, which he was later appointed creative director in 1994.
He expanded Gucci into mens and womens sportswear, eveningwear and home furnishings. Fast forward 5 years later the company acquired the house of Yves Saint Laurent, which he oversaw the acquisition between the two brands. He expanded Gucci into mens and womens sportswear, eveningwear and home furnishings. In 2004 Gucci was acquired by French company Pinault Printemps Redoute,which Tom Ford had decided to part ways from the fashion house and establish his own. By 2005 Tom Ford became a newly founded fashion brand named after himself. Since the earliest days of the brand, Tom Ford has been recognised for their clothes being high-quality with detailed work for their use of different materials and fabrics. In 2006 Estee Lauder joined Tom Ford in partnership for the launch of Tom Ford Beauty, which has been ongoing for over 15 years.
As a result , Ford joins the ranks of global billionaires, according to Forbes which the designer has estimated owning nearly 64% of his company, will receive about $1.1 billion in cash from sales after the deduction of estimated taxes. Ford brand’s chairman Domenico De Sole who previously helmed Gucci will also remain as a consultant during the same period. The deal was set to be a combination of both cash, and debt which deferred payments are due in 2025, which will also allow Tom Ford’s partners, Ermenegildo Zegna and Marcolin to extend their existing licensing agreements which the company has stated. Italian Fashion house, Zegna will expand their current agreement which will include a long term license for all mens and womens fashion, as well as accessories and underwear. While Marcolin will continue making sunglasses and optical frames under the Ford brand name. Estee Lauder, being home to several beauty brands including Clinique and Bobbi Brown, expect annual sales of Tom Ford’s cosmetics to reach $1 billion over the next couple of years.
According to analysts this deal has come at a time where the luxury goods sector is set for global growth, with China slowly lifting coronavirus restrictions which will allow the sector’s high-demand consumers to slowly return to pre-pandemic shopping habits. Chinese consumers have accounted for about 35% of global demand for luxury goods before the pandemic according to Bloomberg data. With all these statistics the question becomes whether or not the Tom Ford name is worth $2.8 billion when the designer steps away in 2023 in retail production for Estee Lauder’s luxury goods.