Kering reportedly in talks to acquire Tom Ford

In August talks of Estee Lauder acquiring fashion brand Tom Ford circulated in what was widely reported to be a potential 3 billion dollar deal. Another party has quietly come into the discussion, namely Kering, who according to the Wall Street Journal is now a “front-runner” to an agreement.

While neither Kering nor Tom Ford have publicly acknowledged discussions of a sale and acquisition, Kering has weathered the pandemic and current financial year with robust sales, and has a market value of just 60 billion euros, down from 100 billion euros last year. Estee Lauder, by comparison, has posted an unremarkable quarter due to slow sales in China, and lowered its outlook for the year.

Kering could be a strong fashion partner for the Tom Ford brand, which is still best known for its menswear. With a luxury portfolio of successful houses with strong accessories businesses like Gucci, Balenciaga and Bottega Veneta, there would ample opportunities to expand handbags and the womenswear categories.

Tom Ford Beauty is licensed to Estee Lauder and earns the beauty giant approximately 275 million dollars per year. Annual revenue will be at least twice this amount.

The involvement of Mr Ford will be key to the brand’s sale. While implementing a strong design team will be necessary to expanding other fashion categories, Mr Ford is a name and face that cannot replaced with a creative director. The cachet of high awareness and high desirability are the basis of driving and growing sales.