Key Takeaways:
Estée Lauder is in discussions to acquire Puig in an agreement that could create a stronger challenger to industry leader L’Oréal, in what would be the biggest pure-play beauty deal to date.
The New York–based cosmetics group behind La Mer, Clinique, and its namesake brand Estée Lauder, and the Spanish owner of Rabanne, Jean Paul Gaultier, and Charlotte Tilbury, said in separate statements on Monday that no decision has been made and no agreement has been reached “over a potential business combination.”
“Unless and until an agreement is signed between the companies, there can be no assurances regarding the deal or its terms,” the companies said.
The Financial Times reported earlier Monday that the companies were nearing a business combination. Shares of Estée Lauder fell close to 8% to around $79 following the report. Spain’s benchmark IBEX 35 index had already closed at the time of the announcement, but shares in Puig opened up around 14% to €17.79 ($20.61).
The companies have been in talks over a potential merger for several months, dating back to the second half of 2025, according to sources close to the situation. However, divisions within both the Lauder and Puig families have so far prevented an agreement.
On the Lauder side, which controls 84% of the voting power of Estée Lauder, non-executive Chairman William Lauder, whose father, Leonard Lauder, was the company’s largest shareholder, supports the deal. However, his cousin Jane Lauder, the company’s second-largest shareholder and Estée Lauder’s former Executive Vice President, Executive Marketing, and Chief Data Officer, opposes it, reflecting long-standing tensions and vast differences over the company’s strategic direction and family legacy.
Across the Atlantic in Spain, a similar dynamic has unfolded among cousins. Manuel Puig, the company’s largest shareholder despite holding a vice chairman role and a largely symbolic sustainability and social responsibility position, had long resisted the deal, while Marc Puig, Executive Chairman and former CEO who led the group’s IPO roughly two years ago, is strongly in favor. The cousins have a strained relationship, and any agreement would likely hinge on Manuel Puig’s backing. Despite his largely ceremonial role, he retains significant influence over the company.
The announcement of the potential tie-up came less than a week after Puig said Marc Puig would step down as CEO after more than two decades on the top job and be replaced, as expected, by Deputy CEO José Manuel Albesa, with Marc Puig remaining Executive Chairman of the board, effectively splitting the roles.
A deal between the companies has been on the table before, with Estée Lauder making several attempts over the years to acquire Puig. The latest serious push came about two years ago, before Puig went public, but the Spanish group consistently rebuffed those approaches.
Puig now enters the final phase of negotiations from a much stronger position than before, having surpassed €5 billion ($5.81 billion) in sales since going public, even as its shares fail to recover from the €24.50 listing price. Estée Lauder, despite its significantly larger scale with annual sales of over $14 billion, has underperformed over the past four years, losing more than $100 billion in market value amid declining sales, restructuring plans that have led to nearly 7,000 layoffs, and weakness in China and travel retail.
The Lauder and Puig families nonetheless share long-standing ties. At the executive level, the relationship has been particularly close: Fabrizio Freda, who remains a company consultant after leading Estée Lauder for 15 years before being succeeded last year by Stéphane de La Faverie following an internal battle involving Jane and William Lauder, has known Marc Puig for years, and the two are close friends.
That connection stretches back even further, to an earlier generation. Leonard Lauder, who served as the longtime CEO of his mother’s company and drove its early expansion, and Mariano Puig, the longtime leader of Puig, maintained a relationship marked by mutual admiration for decades before Mariano Puig’s death in 2021.
Leonard Lauder died last year, after a period in which Estée Lauder had drawn interest from third parties, including LVMH. Those discussions never advanced. The French luxury conglomerate was primarily interested in Estée Lauder’s luxury brands and viewed the broader portfolio as too mass market.
A decade ago, at a conference on family businesses at IESE Business School in Barcelona, the amicable relationship between Puig and Estée Lauder was already on display. Mariano Puig, then still alive, appeared alongside Freda to discuss the strengths—and tensions—of family-controlled companies.
“I personally believe the key element of family companies is competing in a different way—more for the long term, for the industry and for the benefit of all stakeholders,” Freda said. “It’s not about external management or family: it’s about both, and how they work together that makes the magic.”
Freda, who became CEO of Estée Lauder as the first external candidate to take over the top job, framed that balance as both a competitive advantage and a risk. Family-controlled companies benefit from long-term thinking and a strong sense of identity, he said. “You have one risk: not changing fast enough.”
Mariano Puig continued the conversation by placing culture at the center of the business. “The most important thing we have is talent—and people. But talent is not enough; we need passion,” he said. “Passion, talent, performance.”
Another example of the close ties came in 2018 when, in an interview with WWD, Leonard Lauder pointed to Puig as a company he admired. Describing the beauty industry as one driven by endurance, he said it was still “maintained by the long-distance runners,” adding, “I admire Chanel. I admire Puig and Shiseido. They’re long-distance runners.”
In the same interview, he also highlighted Puig’s approach to dealmaking. Asked what he looks for when considering brands to buy, he pointed to Puig’s fragrance license with Carolina Herrera as “the perfect example of picking the right brand for the right time in the right market,” citing its launch across Spain and South America.
Yet embedded in those remarks from a decade ago was a tension that could prove central to any potential combination: culture. Puig has long defined itself as a creative-led company, placing bold brand expression at the core of its strategy—epitomized by the stiletto-shaped bottle of Carolina Herrera’s Good Girl, one of the world’s best-selling fragrances. In recent years, it has reinforced its positioning through a string of acquisitions, particularly in niche fragrances. Estée Lauder, by contrast, has faced criticism for a lack of agility, too much emphasis on China while its domestic market was loss-making, and looking to divest brands in the makeup category.
If the negotiations result in a deal, a combined company would allow Estée Lauder to better compete with L’Oréal, which is valued at around €184 billion ($213.65 billion), compared with roughly $28 billion for Estée Lauder and about $10 billion for Puig.
The talks come against a backdrop of long-standing tensions between Puig and L’Oréal, what industry experts often describe as “la guerre.” The rivalry spans decades, but intensified after the French group wrested control of key fragrance licenses for Valentino and Prada in 2018 and 2019, forcing Puig to rethink its model. The Spanish group pivoted away from licensing toward building a portfolio of owned brands, acquiring companies such as Charlotte Tilbury, beating Estée Lauder in the process, and Byredo, which it secured after a competitive bidding process that L’Oréal ultimately lost.
More recently, Puig was outmaneuvered again in its push to expand in luxury beauty. L’Oréal secured an exclusive partnership with Kering while striking the largest deal in its history: a €4 billion ($4.7 billion) agreement to acquire niche fragrance house Creed. The transaction also includes an option to take control of Gucci Beauty once Coty’s license expires in June 2028, as well as the development of beauty lines for Bottega Veneta and Balenciaga, alongside a broader push into high-end wellness experiences.
Estée Lauder’s discussions with Puig mark the first time the American company has publicly acknowledged talks with another group. While de La Faverie struck an optimistic tone about a turnaround earlier this year, investors have remained unconvinced.
As Leonard Lauder wrote in his memoir The Company I Keep: My Life in Beauty, “Estée Lauder is a family in business. The stronger we are as a family, the stronger we are as a company.”
A deal with Puig could mark a turning point, testing that principle if the Lauder family relinquishes control of the company.