Kering nears sale of beauty unit to L'Oreal, sources say

By Lisa Jucca and Abigail Summerville MILAN/NEW YORK (Reuters) -French luxury group Kering, owner of fashion brand Gucci, is nearing a sale of its beauty division to L’Oreal, according to two people familiar with the situation. One of the sources confirmed the deal would be worth around $4 billion, as per an earlier report by the Wall Street Journal, which was first to report the development. L’Oreal, the world's biggest dedicated cosmetics and beauty player, would acquire fragrance brand Creed and gain rights to develop beauty products tied to Kering’s fashion labels, including Bottega Veneta, Balenciaga, and McQueen, the WSJ reported, adding the deal could be announced next week. Kering, controlled by the French Pinault family, launched its beauty division in 2023, the year it acquired high-end fragrance label Creed for 3.5 billion euros ($4 billion) in cash. Kering declined to comment and L'Oreal did not immediately respond to a Reuters request for comment. A sale would be a major step forward by new CEO Luca De Meo, who officially took office in September, to address a high-debt issue that had sparked investor anxiety. Kering's net debt was 9.5 billion euros at the end of June. The company has struggled to reverse slowing sales at its largest brand Gucci as the luxury market has been hard hit by lower consumer demand, especially in China, which had led growth in the sector for more than a decade. Since Kering announced De Meo's appointment in mid-June, shares in the company have surged by around 60%. L'Oreal has also been approached by representatives of Armani Group, Reuters reported this month, after the beauty conglomerate was named in the will of late designer Giorgio Armani as one of the preferred buyers for a minority stake in his fashion house.  ($1 = 0.8583 euros) (Reporting by Lisa Jucca in Milan, Abigail Summerville in New York and Rajveer Singh Pardesi in Bengaluru; Editing by Jan Harvey, Barbara Lewis and Alison Williams)

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