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New leader on Tom Ford deal

The fashion designer Tom Ford walks down a runway following a fashion show.

Photo: JP Yim/Getty Images for NYFW

Fashion house Tom Ford is nearing a deal to be acquired by beauty conglomerate Estée Lauder for $2.8 billion, the Financial Times reports, stepping in where Kering had been reported to be in the lead.

Why it's the BFD: Luxury sales have continued to grow, creating one sector where the environment is not entirely hostile to deal-making.

The intrigue: This would be Estée Lauder's first acquisition of a fashion house, following in the well-trod footsteps of Spain-based fragrance and beauty conglomerate Puig.

  • Puig has acquired a number of luxury brands over the years, locking in their lucrative fragrance and beauty licenses, including Nina Ricci, Jean Paul Gaultier and Dries van Noten.
  • Now Estée Lauder, which already holds the Tom Ford Beauty license, is embracing this strategy.
  • Tom Ford and Estée Lauder did not respond to requests for comment, while sell-side investment bank Goldman Sachs declined to comment.

Flashback: Kering, the parent of Gucci, was previously said to be in the pole position to acquire Tom Ford.

  • Kering, when it was known as PPR, famously failed to reach a deal in 2004 with Tom Ford and his business partner Domenico de Sole to continue running Gucci after the duo had spent a decade turning the business around.
  • That led Ford and de Sole to launch a new brand under the designer's name.

The big picture: New York-based Tom Ford is perhaps the first bonafide U.S. luxury brand to achieve levels of success historically limited to European brands.

  • Brands such as Ralph Lauren and Michael Kors supplemented the sale of high-end goods with mass products found in mainstream department stores such as Macy's to achieve success.
  • And it usually takes many decades to build a $1 billion-plus luxury business, something Ford and de Sole did in less than 20.

State of play: Lanvin, the French luxury brand, is planning to go public via a SPAC valued at $1 billion, while online luxury site Farfetch picked up a large stake in rival Yoox Net-A-Porter during the summer.

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