Estée Lauder Ends Merger Talks with Puig

Estée Lauder Cos. has ended merger discussions with Spanish rival Puig, scrapping plans to create a combined fashion and beauty retailer valued at nearly $40 billion after the two sides failed to agree on control of the merged entity.

Estée Lauder, one of the world’s largest manufacturers of skin care, makeup and fragrances, owns brands including Clinique, Bobbi Brown and Tom Ford Beauty.

Puig, which went public on the Madrid stock exchange two years ago, controls labels such as Jean Paul Gaultier, Charlotte Tilbury, Carolina Herrera and Dries van Noten.

Estée Lauder said Thursday that “the parties have terminated discussions regarding a potential business combination.”

The talks, first reported in March, failed to advance to an agreement on the structure of a combined company. Sticking points included which of the two controlling families would hold the balance of power and the allocation of board seats, according to the Financial Times.

Bloomberg reported that another point of contention was the level of compensation demanded by Charlotte Tilbury, one of the UK’s richest beauty entrepreneurs.

Stéphane de La Faverie, chief executive of Estée Lauder, said: “We are grateful for the conversations we have had with Puig. Today, we are reiterating our confidence in the power of our incredible brands, our talented teams and our strength as a standalone company.”

The negotiations were unpopular with Estée Lauder investors; the company’s market value dropped by about a fifth after the talks became public. On Thursday, Estée Lauder shares rose 11.5% in after-hours trading as investors welcomed the termination.

The Lauder family controls the company, founded in 1946, through a dual-class voting structure. The family owns about 38% of shares but directly or indirectly holds more than 80% of voting power.

Shares of Puig, which had fallen nearly 30% since its €13.9 billion IPO in 2024, rose 15% when the potential merger was announced. The stock then dropped by the same amount after the talks ended.

Most voting rights in Puig remain controlled by the founding family, which started the business 110 years ago.

José Manuel Albesa, chief executive of Puig, said Thursday that the company “appreciated the meaningful conversations.”

“This decision does not alter our strategic roadmap,” Albesa added. “We will continue to take a highly selective and value-focused approach to mergers and acquisitions in order to further complement our portfolio.”

Puig has completed 11 separate deals to acquire fragrance and fashion brands between 2011 and 2024.

In February, the Barcelona-based company appointed Albesa as its first chief executive who is not a member of the Puig family. He succeeded Marc Puig, who had run the company since 2004 and remains executive chairman.