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France's L'Oreal in talks to buy Mugler, Azzaro from Clarins

[PARIS] L'Oreal is in talks to buy the Mugler and Azzaro brands from Clarins Group, as the French luxury goods group reinforces its presence in upmarket cosmetics.

While its higher-end products such as Lancome or Kiehl's have found favour with people seeking anti-ageing treatments, L'Oreal has struggled to revive its mass market business.

"The perfume category is at the heart of our global strategy for growth ... we would be thrilled to welcome Mugler and Azzaro," Cyril Chapuy, president of L'Oreal Luxe, said. "These signatures, with a long history in fashion and olfaction, would perfectly complete our portfolio of brands," he added in a statement on Tuesday.

L'Oreal did not disclose financial details of the planned acquisitions of the Azzaro brand, which was founded by Loris Azzaro in the 1960s, and Mugler, founded in the 1970s.

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A Clarins official said that the two brands' combined represented sales of 416 million euros (S$637 million), or 26 per cent of Clarins' group annual sales of 1.6 billion euros.

Shares in L'Oreal, which in April reported an 11.4 per cent rise in first-quarter group sales to 7.6 billion euros driven by its more expensive brands, were up 0.6 per cent at 0820 GMT.

"This deal makes perfect sense in terms of L'Oreal's plans to strength its portfolio of brands. The company has built up via a series of acquisitions and generates enough cash for these types of deals," said Roche Brune Asset Management fund manager Gregoire Laverne.

REUTERS