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L’Oréal SA is selling up to €3 billion ($3.47 billion) of bonds in a three-part deal to help finance its acquisition of Kering Beauté.
The beauty company is offering a two-year floating-rate note, a five-year fixed-rate note and a long 10-year fixed-rate bond, each at an expected €1 billion size, according to a person familiar with the matter who asked not to be identified. The deal has pulled in a cumulative €8.4 billion of investor demand across the tranches.
L’Oréal agreed to buy Kering’s beauty division last month, with the Gucci owner set to receive €4 billion in cash at closing of the deal, which is expected in the first half of next year, as well as royalties from L’Oréal.
The Kering Beauté acquisition marked the latest in a string of deals for the beauty giant. L’Oréal bought Aēsop in 2023 at an enterprise value of about $2.5 billion, and recently purchased South Korean brand Dr. G, a majority stake in Medik8, and minority stakes in firms including Omani high-end fragrance maker Amouage.
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There has been a flurry of merger and acquisition bond deals in the European primary market. Telecom company Orange SA last week sold its biggest-ever bond deal after agreeing to buy the remaining stake in its Spanish joint venture MasOrange, Air Liquide raised €2.15 billion for its purchase of South Korea’s DIG Airgas and Capgemini SE drew huge bids for a deal to fund the acquisition of IT outsourcing firm WNS Holdings Ltd.
Investor demand for the L’Oréal deal saw spreads on the tranches tightened. The two-year floating-rate note is being offered at around 25 basis points over three-month euribor, while the five-year bond is now in the area of 45 basis points over midswaps. The long 10-year bond is being marketed at around 75 basis points over midswaps.
The bonds are expected to be rated Aa1 and AA by Moody’s Ratings and S&P Global Ratings respectively, with Citigroup Inc, JPMorgan Chase & Co., Natixis SA, Societe Generale SA, Barclays Plc, HSBC Holdings Plc, ING Bank NV and Standard Chartered Plc managing the offering.
By Ronan Martin
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