Rabanne owner Rabanne's shares rose 15% on the back of a possible deal with Estée Lauder

Shares of the Spanish beauty group Puig, which owns such designer brands as Jean Paul Gaultier, Rabanne (formerly Paco Rabanne) and Dries Van Noten, rose on March 24 on the stock exchange in Madrid by more than 15% - today may become for the company's securities the best in history, writes Reuters. Such dynamics of Puig shares demonstrate after its competitor - Estée Lauder from the United States - confirmed that the companies are negotiating a possible merger.

Estée Lauder said on March 23 that the final decision on a potential deal with Puig has not yet been made, CNBC reports. Initially, the Financial Times reported on the possible merger the day before. Financial terms of the deal are not disclosed, but, as the newspaper points out, the combined company will be worth more than $40 billion.

The merger of larger U.S. Estée Lauder with smaller Spanish Puig will concentrate some of the world's biggest beauty and perfume brands, including Tom Ford Beauty, Carolina Herrera and Clinique, into one company, CNBC noted.

Puig's market capitalization before the start of trading on March 24 was about €8.8 billion ($10.2 billion), while Estée Lauder was valued at $28.7 billion. Estée Lauder shares added 0.24% in the premarket on March 24 after falling 7.7% in the previous session amid initial reports of a possible deal.

Estée Lauder expects to restore growth in financial performance and is in the early stages of turning around the business. As part of this process, the company, in particular, is carrying out staff reductions. Additional pressure is created by U.S. duties: in February, the company warned that they will reduce its annual profit by about $100 million. Estée Lauder expects in the current fiscal year (until June 30) adjusted earnings per share at the level of $2.05-2.25 with the consensus of $2.16. Revenue growth is forecast at 3-5% versus market expectations of 4.3%. The company's margins are expected to decline 50 bps in the current quarter. Estée Lauder shares have fallen 24.3% since the beginning of the year.

Puig, on the other hand, has seen steady sales growth since going public in 2024, CNBC notes. The company's 2025 revenue grew 5.3% to €5.04 billion ($5.84), with organic revenue growth of 7.8%. Net income added 11.9% to €594 million ($688.4). The company's portfolio covers perfumes, skincare and decorative cosmetics under the Charlotte Tilbury, Nina Ricci and Rabanne brands. Since the beginning of the year, the company's securities have added more than 21% in Madrid.

One of the key motivations behind the merger between Estée Lauder and Puig is to increase competition with L'Oréal, a source familiar with the talks told Reuters.

Investors tend to have a negative attitude to large deals: this is evidenced by the dynamics of shares following the results of recent large mergers - for example, between food companies Keurig and JDE Peet's last August (Keurig securities fell by 17% on news of the deal), as well as consumer goods manufacturers Kimberly-Clark and Kenvue in November 2025 (Kimberly-Clark shares lost 16%), Citi analysts note.

While the scale of the deal between Estée Lauder and Puig creates "complexity and execution risks," Citi analysts led by Filippo Falorni believe the merger could lead to "synergies of 5% of target sales" and deliver double-digit earnings per share growth for the combined company in the first year.

Deutsche Bank said that Estée Lauder's stock performance "clearly reflects the market's wariness" about a possible deal.

"Estée Lauder is in a business turnaround phase that requires management to focus on brand investment, innovation and execution in key markets after several years of declining sales," Reuters quoted Morningstar analyst Daean Suh as saying.

12 out of 17 analysts covering Spanish Puig shares advise buying them, five advise holding. There are no sell recommendations.

For Estée Lauder securities the picture is a bit different: the majority of analysts who follow the company's shares - 13 out of 25 - recommend to keep them in the portfolio. 11 advise to buy and one advises to sell.

This article was AI-translated and verified by a human editor