Estee Lauder-Puig talks fail after Charlotte Tilbury tension

[NEW YORK] The proposed multibillion-dollar tie-up between Puig Brands and Estee Lauder fell apart due to makeup artist Charlotte Tilbury’s demands regarding her compensation in the deal, according to people familiar with the matter.

Puig and Estee Lauder have been holding talks about a potential business combination since March. On Thursday (May 21), they each issued statements saying those discussions had ended, but neither elaborated on the reason.

One sticking point was a change-of-control clause held by Tilbury, who sold her eponymous brand to Puig in 2020, said the people, who weren’t authorised to speak publicly. That wasn’t the only issue that doomed the negotiations, one of the people said.

Estee Lauder and Puig declined to comment beyond their statements. Tilbury’s company didn’t immediately return a message seeking comment. 

Shares of Puig were 14 per cent lower on Tradegate on Friday (May 22) compared with the Madrid closing price following the merger collapse. 

Wall Street analysts had already expressed scepticism about the tie-up, questioning Estee Lauder’s ability to integrate additional brands during its own turnaround that has already seen the company cut thousands of jobs. 

Estee Lauder shares jumped as much as 16 per cent after the close of regular trading on Thursday following the news. The stock had slumped after the company said it was in talks to buy Puig.

Combined, the companies have a market value of nearly US$39 billion based on closing prices Thursday, with annual sales of around US$20 billion in 2025.

Absent the deal with Puig, Estee Lauder chief executive officer Stéphane de La Faverie is left focusing on reviving the company, which has reported three years of annual sales drops.

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“We are reiterating our confidence in the power of our incredible brands, our talented teams, and our strength as a standalone company,” La Faverie said in a statement. 

Estee Lauder’s turnaround plan includes shifting the company’s focus to faster-growing channels like Amazon and TikTok shops and has been selling lower-priced items to appeal to younger shoppers.

The company, which is currently second only to L’Oreal in the cosmetics category globally, has seen its shares decline around 25 per cent this year.

For Puig, the aftermath of the deal collapse means the focus is likely to “shift to operating results that may see further top-line slowdown amidst a normalising fragrances market and near-term pressure to the Middle East and travel retail,” Celine Pannuti, an analyst at JP Morgan wrote in a note. 

“Management will have to convince on the long-term opportunities and ability to deliver on a standalone basis if the family was willing to sell at multiples well below the average in the beauty sector,” she added. BLOOMBERG