Will there be a merger of Puig and Estée Lauder?

Barcelona"If I'm asked, I think the options between merging or not merging Puig Brands with the American Estée Lauder are at 50%.". This is the statement of a person who knows the negotiations between the two family beauty and fashion companies, which became known at the end of March. One of the points that makes it difficult to reach an agreement is the price of the Catalan group, which is worth around 10 billion euros, compared to Estée Lauder's 30 billion dollars (26 billion euros).

According to various sources, the American firm offers to pay between 18 and 19 euros per share. And this falls far short of the 24.50 euros each share was worth when it went public on May 3, 2024, levels it has not recovered. And this, despite the surge it has experienced since it became known that there could be an integration to compete with the French giant L'Oréal, controlled by the Bettencourt Meyers family and Nestlé, and which is worth around 200 billion.

The truth is that, from Puig, they were quick to state that no definitive decision has yet been made and that "until there is an agreement, it cannot be guaranteed" that one will eventually be reached. They did so when they announced the results for the first quarter of this year, with a minimal increase of 0.8%, but which, in reality, once the effect of the exchange rate against the dollar was eliminated, was 4.7%. This places the Catalan company in a better position than Estée Lauder, which is in a restructuring phase, and strengthens it in terms of negotiating the share exchange ratio.

From an industrial point of view, there is complementarity. The American company is focused on skincare (48.59% of sales) and makeup (29.35%), while Puig focuses on fragrances and fashion (72%).

One of the most complex issues could be governance and the distribution of power. The Puig family, which when it went public retained more than 70% of the capital and more than 90% of the voting rights, would aspire to represent a quarter of the total of the new group, according to the sources consulted. Apart from losing totally or partially another major Catalan company, if the operation is carried out, it will be necessary to see if the objective, considering the context of a globalized economy dominated by large groups, is to fulfill the saying that, in reality, it is better to be the master of a little than a servant of much.