Estée Lauder and Puig End Merger Talks Over Power Balance

The US cosmetics company Estée Lauder has ended merger talks with its Spanish rival Puig to create a fashion and beauty retailer worth almost $40bn (£30bn/€34.5bn) after failing to agree which would hold the balance of power in the combined group.

Estée Lauder is one of the world’s biggest manufacturers of skin care, makeup and fragrances with a portfolio that includes Clinique, Bobbi Brown and Tom Ford Beauty.

Puig, which floated on the Madrid stock market two years ago, owns brands including Jean Paul Gaultier, Charlotte Tilbury, Carolina Herrera and Dries van Noten.

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

The talks, which were first revealed in March, failed to progress to an agreement on how the final merged entity would be structured. Sticking points included the issue of which of the two families that control the fashion and beauty giants would hold the balance of power and the allocation of board seats, according to the Financial Times.

Bloomberg reported that another bone of contention had been the level of compensation demanded by Tilbury, one of the UK’s richest beauty entrepreneurs.

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

The talks had not been popular with Estée Lauder investors with its market value falling by about a fifth after they were made public. On Thursday Estée Lauder’s shares climbed by 11.5% in post-market trading as investors welcomed the news they had been terminated.

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

However, shares in Puig, which had fallen almost 30% since its €13.9bn flotation in 2024, rose 15% when the potential merger was announced. The company’s shares plunged by the same amount after the termination of the talks.

Most of the voting rights remain controlled by the Puig family, which founded the business 110 years ago.

José Manuel Albesa, the chief executive of Puig, said on Thursday that the company “appreciate[d] the meaningful conversations”.

“This decision does not alter our strategic roadmap,” he 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 struck 11 separate deals to buy fragrance and fashion brands between 2011 and 2024.

In February, the Barcelona-based company announced the appointment of 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 chair.