Is Unilever about to acquire Estee Lauder?

27-Aug-2017 - Last updated on 28-Aug-2017 at 15:07 GMT

Rumors of a takeover began to fly Friday after the Evening Standard published an item, citing unnamed sources, suggesting that Unilever and other interested buyers (multinational cosmetic companies, global investment firms, and holding companies) are preparing to bid on the company.

According to sources “the American cosmetics giant with a market value of almost $40 billion (£31 billion), is being circled by interested parties,” wrote Jamie Nimmo in his article for London’s Evening Standard.

“The sources said Unilever…will probably face competition from the likes of French cosmetics heavyweight L’Oréal, as well as 3G and Warren Buffett’s Berkshire Hathaway,” reported Nimmo. And by Sunday the Times was reporting that “L’Oréal is rumoured to have made an indicative approach of $122.80 a share.”

Family business

The Estée Lauder Companies is about 40% owned by the Lauder family. And several family members are figure heads, active executives, and brand leaders with the company, including chairman emeritus Leonard Lauder, creative director Aerin Lauder, and Jane Lauder, currently global brand president of Clinique.

The family controls well over half of the company’s voting rights, nearly 90%, according to Nimmo, and will therefore be pivotal in deciding the future of Estée Lauder regarding any prospective merger, acquisition, or takeover.

Food business

Reports suggest that Unilever’s supposed interest in acquiring The Estée Lauder Companies comes as part of a strategy to avoid its own demise. Earlier this year Kraft Foods bid to take over Unilever, as Bloomberg.com, the Evening Standard and other sites point out.

Apparently if Unilever can demonstrate its stand-alone value to shareholders, the CPG giant won’t be at risk for being acquired. And buying up a prominent beauty company with strong businesses in color cosmetics, skin care, and fragrance would add to that value.

Final word

In an item out just this morning on TheStreet.com, Fabrizio Freda, CEO of The Estée Lauder Companies, and executive chairman William P. Lauder are quoted as writing in an email to employees that “There is no truth to these rumors. The Estée Lauder Companies is not for sale. The Lauder Family and our board place great value in remaining independent. Our company is strong and we have excellent momentum going forward.”