Editor’s Note
This article details Puig’s unsuccessful attempt to acquire Kering’s beauty division, a move that would have significantly elevated its position in the global luxury beauty market.
Puig Brands, the “premium beauty” company, recently suffered a blow to its aspirations of climbing the global rankings of beauty, perfumery, cosmetics, skincare, and luxury fashion companies. The firm, chaired by Marc Puig, held “mature and advanced” talks until the last moment to acquire the perfumery and beauty division of Kering, the French company specializing in jewelry, fashion, and leather goods. This plan would have allowed Puig to bypass its negative stock market performance and take a giant leap to compete with the largest players in the sector—a sharp ambition for one of the most well-known dynasties of the Catalan bourgeoisie.
However, the ultimate winner was the French company L’Oréal, the sector leader and a constant benchmark, a long shadow looming over its competitors, which put 4 billion euros on the table.
The scale of the operation led Puig’s management to propose a deal combining cash payment and shares of the Catalan company, as well as a share swap with the seller, Kering. Puig spokespersons declined to comment on the matter.
The Catalan company offered Kering a strategic alliance with a share swap, so that ultimately both would be shareholders in each other. According to sources consulted, Puig was willing to cede up to 20% of its capital to Kering. That percentage, based on Puig’s current market capitalization, would be equivalent to about 1.6 billion euros. There was still a long way to go to reach the 4 billion offered by L’Oréal, a figure Puig could not match, which is why it proposed that Kering remain involved in the business. Furthermore, Puig’s negative stock market performance diminished the attractiveness of this proposal from Kering’s perspective.
And the company chaired by François-Henri Pinault, focused on reducing its high debt, was eager to receive the sale proceeds in cash.
Puig and Kering have quite a few things in common. They are owned by families focused on the luxury sector, albeit in different segments. Both are publicly traded and tightly control both the economic and political/voting rights of the majority of the capital. But their market evolution is clearly divergent.
In the past year or so since its IPO, Puig, with revenues of 4.7 billion, has lost around 40% of its market capitalization, falling from 14 billion to 8.3 billion. This negative trajectory is largely attributable to the global luxury sector’s situation and has generated concern among some members of the owner families.
Now, the ultimately rejected proposal to cede a significant percentage of capital to Kering has also created some family uncertainty, according to some sources consulted, due to the fact of ceding a substantial part to a major shareholder outside the original core. Despite this, the plan presented to Kering was approved unanimously by both Puig’s board and that of Exea, the company grouping the shareholder families, chaired by Josep Oliu, president of Sabadell.
Kering, for its part, with sales of over 17 billion, is owned by the Pinault family’s holding company Groupe Artémis, which holds 42% of the shares and up to 59% of the company’s voting rights. The company groups brands like Gucci, Saint Laurent, Bottega Veneta, Balenciaga, and Alexander McQueen. The Pinaults are the third-largest French luxury group and also own auction house Christie’s, advertising agencies, media outlets, the Fnac retail chain, and renowned wineries and wines like Château Latour.
On the stock market, despite its sales reduction problems and high debt, it has maintained a very significant upward trend, partly due to the appointment of Luca de Meo and the presentation of its strategic plan, which includes the now-materialized sale. In one year, its share price has risen 80%, reaching a valuation of nearly 38 billion, although six months ago that figure was half.
These are days of change for Tatxo Benet, until recently chairman and CEO of Mediapro, the Catalan audiovisual group owned by the Chinese company Orient Hontai. The owner has decided to implement a management change and has appointed Sergio Oslé, former CEO of Telefónica España and president of Movistar+, as executive chairman. Benet will completely disassociate from the company he founded with his former partner Jaume Roures by the end of December. In recent months, the criteria between the two parties had diverged, and Mediapro’s board of directors had even overturned some acquisition proposals for another company from Benet’s team.
The Catalan company reported revenues of just over 1 billion euros last year, 11% less than the previous year and far from the 1.7 billion before the pandemic.
Now, the transfer of the stake held by the now-former chairman in the company, around 4%, remains to be finalized. He has the right to sell to the majority shareholder once his contract with the company ends—a sale that Roures also made two years prior. Regarding the future, Benet has stated that whatever he does, he “will never compete with Mediapro.”
