Estée Lauder Cos Inc has agreed to buy US fashion label Tom Ford for a whopping amount of $2.8 billion, marking its biggest deal yet.
Estée Lauder, which announced the buyout on Tuesday, will “allow the company to venture into new categories and compete more closely with fashion houses such as LVMH Moët Hennessy Louis Vuitton SE,” the Wall Street Journal reported.
The report added that the cosmetics company is expected to pay roughly $2.3 billion, net of a $250 million payment from Italian eyewear manufacturer Marcolin SpA, which has its own licensing deal with Tom Ford.
Estée Lauder will fund the transaction through a “combination of cash, debt and $300 million in deferred payments to sellers that become due beginning in July 2025,” the report said.
However, the acquisition is still subject to regulatory approvals, and is expected to close during the first-half of 2023.
Additionally, the acquisition has pushed the 61-year-old American fashion designer into the billionaires’ club.
According to estimates by Forbes magazine, Ford is set to receive at least $1.1 billion in cash, following the sale.
Ford had founded the label in 2005 after leaving Gucci, and is “altogether, worth an estimated $1.2 billion,” Forbes said.
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