An Estee Lauder cosmetics counter is seen in Los Angeles, California, U.S., August 19, 2019. (REUTERS File Photo)
Luxury cosmetics company Estée Lauder will buy designer fashion house Tom Ford for $2.8 billion, the company announced on Tuesday.
Estée Lauder expects to fund the transaction through a combination of cash, debt and $300 million in deferred payments to sellers that become due in July 2025.
The acquisition is expected to close in the first half of calendar 2023.
Under the agreement, Tom Ford, founder and chief executive of Tom Ford International, will continue to serve as the brand's creative visionary after closing and through the end of 2023.
Domenico De Sole, chairperson of Tom Ford International, will stay on as a consultant during that time as well.
Estée Lauder expects the transaction to be dilutive to adjusted earnings per share in fiscal 2023 by $0.05 to $0.15, primarily from one time acquisition-related costs.
For fiscal 2024, the transaction is anticipated to be roughly neutral to adjusted earnings per share.
Estée Lauder noted that the deal will extend and expand the Tom Ford brand's longstanding relationship with Italian luxury fashion house Ermenegildo Zegna NV to include a long-term license for all men's and women's fashion as well as accessories and underwear.
As part of the transaction, Zegna will acquire operations of the Tom Ford fashion business necessary to perform its obligations as licensee.
The brand's current license with Marcolin, eye-wear manufacturer, will also be substantially extended.
