Brazillian cosmetics giant sells Melbourne-founded Aesop to L’Oréal in $3.7 billion deal

The Brazil-based parent of luxury skincare brand Aesop has sold the company to L’Oréal in a deal valuing the Australian-founded business at US$2.52 billion (AU$3.7 billion).

For Natura &Co, the owner of cosmetics brands Avon, The Body Shop and Natura, the sale comes just over 10 years after it took control of Aesop for close to $70 million - representing a mammoth premium for the São Paulo-headquartered company.

According to Natura &Co, the divestment of Aesop will strengthen its balance sheet and free up resources to focus on its strategic priorities which include the optimisation of Avon’s international footprint and the improvement of The Body Shop business.

Founded in 1987 by hairdresser Dennis Paphitis in Melbourne, Aesop has become one of Australia’s most successful luxury cosmetics brands in large part due to its sophisticated and minimalistic branding and a commitment to high-quality ingredients and vegan products.

It wasn’t until 2003 that the company would open its first bricks-and-mortar retail offering to customers in ‘an underground nook in the Melbourne bayside suburb of St Kilda’. Since then, the company’s store footprint has grown tremendously to more than 395 outlets across 29 markets including Australia, New Zealand, Japan, Canada, USA, Malaysia, Germany and most recently mainland China.

According to Natura &Co, since the parent took control of Aesop the brand has posted ‘spectacular growth’, with gross sales increasing from US$28 million in 2012 to US$537 million most recently.

Natura &Co CEO Fabio Barbosa said the divestment - expected to close in Q3 2023 - marked a new development cycle for the company.

“With a strengthened financial structure and a deleveraged balance sheet, Natura &Co, exercising strict financial discipline, will be able to sharpen its focus on its strategic priorities, notably our investment plan in Latin America,” Barbosa said.

“We are proud of the remarkable success of the Aesop brand, and we are extremely grateful to all Aesop's associates, who contributed immensely not only to Aesop's success, but also to making Natura &Co what it is today.

“We are confident that Aesop's growth story will continue under the ownership of L'Oréal and wish Aesop continued success in this new chapter.”

Aesop CEO Michael O’Keefe said today was an ‘exciting day for Aesop’.

“With the support of Natura &Co, over the past decade, we have built Aesop into an admirable global force in the luxury beauty space, with a powerful product proposition and a unique customer and retail experience,” O’Keefe said.

“We now enter the next phase of our development and I'm confident that with L'Oréal's partnership we will be able to bring our exceptional skincare products to even more people and continue to expand our brand globally.

“We thank Natura &Co for its support and are greatly looking forward to working with L'Oréal to continue our development, building on our distinctive brand and heritage.”

L’Oréal CEO Nicolas Hieronimus welcomed ‘the epitome of avant-garde beauty’ Aesop and its teams to the L’Oréal Groupe family which includes its own consumer brand; luxury lines like Khiel’s, Lancome and Yves Saint Laurent; and professional labels Kérastase, Redken, and Matrix.

“Aesop is the epitome of avant-garde beauty, whose products are not only made with great care and exceptional attention to detail; they are a superb combination of urbanity, hedonism and undeniable luxury,” Hieronimus said.

“Aesop taps into all of today's ascending currents and L'Oréal will contribute to unleash its massive growth potential, notably in China and Travel retail.”