Estée Lauder says it's talking with Spain's Puig. That's not helping its stock.

By Claudia Assis

Estée Lauder and Barcelona-based Puig Brands could merge, beauty-products maker says

Estée Lauder said it could merge with the Spanish luxury company Puig, whose brands include Nina Ricci, Carolina Herrera, Rabanne and Dries van Noten.

Estée Lauder Cos. said late Monday it is in talks about a "potential business combination" with Spain's Puig Brands, confirming earlier reports about talks that sent the U.S. company's stock down nearly 8%.

In a terse statement, the beauty-products maker (EL) said that the two companies could merge their businesses but that no final decision or agreement has been reached. Puig confirmed the talks in a statement to Spain's stock-market regulatory arm but also said neither an agreement nor final decision had been reached.

"Unless and until an agreement is reached, there can be no assurances regarding the deal or the terms," said Puig.

Shares of Estée Lauder moved just marginally higher in premarket U.S. trading on Tuesday, while Puig's Spain-listed stock (ES:PUIG) surged 14% in Tuesday trading.

Barcelona-based Puig operates luxury names such as the beauty and fashion brand Carolina Herrera, makeup and skin-care brand Charlotte Tilbury, and skin-care brand Dr. Barbara Sturm. The company said in February that its 2025 sales topped 5 billion euros, or about $5.8 billion.

Estée Lauder, headquartered in New York, reported fiscal 2025 sales of $14.3 billion, with analysts polled by FactSet expecting fiscal 2026 sales of $15 billion for the company, which in addition to the eponymous brand also owns beauty mainstays such as La Mer, Clinique and MAC.

Estée Lauder's stock has lost a quarter of its value this year, compared with a loss of about 4% for the S&P 500 index SPX. The shares have outperformed the equity benchmark on a 12-month basis, however, rising 18% as compared with the S&P's 16% gain.

The Financial Times reported on the talks earlier Monday.

"The combined business would have revenues of just over $20 billion, and would give Estée Lauder a larger fragrances portfolio and diversify exposure to Europe and L. America, while the opportunity for Puig would be part of a wider and more balanced beauty group," said a team of JPMorgan analysts led by Celine Panutti.

However, Panutti and her team suggested possible U.S. antitrust concerns given Lauder is a major player in prestige makeup and Charlotte Tilbury is the No. 3 brand in that category.

"We are surprised that the Puig family will relinquish independence and majority control (even if it retains its economic interest) of the 112-year-old group and given the recent market introduction," said Panutti and her team. The deal is also "intriguing," given the company's governance changes last week, with Marc Puig named chairman and José Manuel Albesa tapped as the new CEO.

Puig shares are trading at 8.5 times earnings before interest taxes, depreciation and amortization (EBITDA) at just over EUR17, well under last May's IPO price of EUR24, the analysts noted.

"While valuation of beauty assets is under pressure in the broader space, we would think a deal would have to be at a substantial premium to the current share price," around 15 to 20 times EBITDA, equivalent to at least EUR28 per share, said Panutti and the team.

As well, the market could see potential interest from other rivals and that could keep supporting Puig shares, they said.

Barbara Kollmeyer contributed.

-Claudia Assis

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