Estée Lauder and Puig terminate merger talks, pre-market up nearly 12%

Estee Lauder said Thursday that it has terminated potential merger talks with Spanish beauty group Puig. After the announcement, Estee Lauder's pre-market stock price surged nearly 12%.

Estee Lauder stated in a declaration that the company will continue to focus on the "Beauty Reimagined" transformation plan. This plan includes focusing on high-end new product launches and streamlining the company's supply chain. Estee Lauder's President and CEO, Stéphane de La Faverie, said:

"We are more optimistic than ever that Beauty Reimagined will unlock significant long-term value, and we will accelerate the implementation of this strategy."

As part of the transformation, Estee Lauder has planned to lay off 3,000 employees and seeks to cut up to 10,000 positions, expecting to achieve cost savings of $1.2 billion.

In March of this year, Estee Lauder had disclosed that it was exploring a merger with Puig. Estee Lauder owns brands such as Clinique, Tom Ford Beauty, and is listed on the New York Stock Exchange; Puig owns brands like Charlotte Tilbury, Jean Paul Gaultier, etc. The market values of the two sides are significantly different, with Estee Lauder's current market value being around $28 billion, and Puig's being about $3 billion (2.7 billion euros).

AJ Bell's market director Dan Coatsworth said in a report on Friday that analysts had been concerned about this merger due to the misalignment of the two parties' brands and the potential for a power struggle; now that the deal has been terminated, investors regard it as almost a "narrow escape".

“Estee Lauder and Puig were not the most natural combinations to begin with. One side focuses on skincare, makeup, and haircare, while the other primarily targets designer clothing. The real intersection of the two companies is in the fragrance and scent business.