Kering first signalled interest in the acquisition of Creed earlier this year.
A Financial Times report has revealed how much Gucci owner Kering paid to acquire fragrance label Creed late last month. Per the report, which cited in-house sources, the deal saw Kering pay around 3.5 billion euros (approximately $3.83 billion).
Kering, the French luxury group, first signaled interest in the acquisition of Creed earlier this year. At the time, Kering said the acquisition is in line with its efforts to expand its beauty unit. The group also projected that the acquisition will improve its chances to compete against the likes of LVMH and Hermès.
According to the FT’s Monday report, however, the all-cash deal for the Paris-based luxury group to buy 100% of Creed from funds controlled by BlackRock Inc. and current chairman Javier Ferran, will close sometime in the second half of the year.
Although the payment was reportedly made last month, FT suggests that the firm may have intentionally left out the details of the transaction initially. This was so as not to publish Creed’s robust profit margins.
Kering Keen on Beauty Unit Success
As earlier mentioned, the recent move by Kering is aimed at strengthening its beauty segment. And to that end, the group named Raffaella Cornaggia to head the unit in February.
However, it is noteworthy that its focus on the so-called beauty unit may have been influenced by some of its rivals in the luxury business. For example, it is worth noting that Hermès International and LVMH Moët Hennessy Louis Vuitton SE have been relatively successful in the beauty segment recently.
More so, Kering’s interest in acquisitions goes beyond just Creed. And to achieve its aim, the firm has been raising funds from all sides. It, however, saw the most significant fund to help its cause from the sale of its Puma SE stake.
By acquiring Creed, Kering will be looking to tap into the growing demand for luxury cosmetics. But more importantly, it would also be hoping to leverage its reputable brands like Gucci, to scale its cosmetics business.