Puig’s shares soared 14% on the stock market after Estée Lauder announced that both companies would give rise to a cosmetics giant, with a joint capitalization of more than 35 billion euros.
The Spanish cosmetics company confirmed this Monday that it is holding talks about a possible business combination with Estée Lauder, in the information sent to the markets supervisor. The same, he adds, “would imply the potential merger of the business of both companies.” “No final decision has been made nor has any agreement been reached. As long as there is no agreement, there can be no guarantee that there can be an operation or its terms,” the statement closes.
Analysts point out that Estée Lauder would have to pay a considerable premium to acquire the Spanish company. Estée Lauder shares closed down 7.7% in New York on Monday. Puig’s shares had accumulated an aggregate drop of 37% since its IPO in 2024.
The US investment bank JPMorgan believes that a “possible merger would make sense from a product, geography and channel perspective in the long term, as it would increase both the scale and scope of the combined entity, but could be a distraction from the current restructuring of Estée Lauder.” The investment bank’s experts explain that for the operation to go ahead, “a substantial premium would be needed, which would put pressure on Estée Lauder’s shares in the short term.”
Elena Fernández-Trapiella, an analyst at Bankinter, explains that “the operation would allow Puig to scale its operations, become part of a more diversified group by products and brands and close the gap with the big players in the sector.”
For its part, for the American giant, “it would strengthen its position in the fragrance segment by expanding its catalog of premium brands, but yesterday the value picked up the news with a drop of 7.8% due to the risk of paying an excessive price and reducing focus on the ongoing restructuring.”
With sales declines in recent quarters and losses in 2025, Estée Lauder “is trying to reposition its brands with the launch of new products, especially in the Skin Care segment, increasing investments and cutting costs. All business areas and geographies showed negative growth in 2025,” explains Fernández-Trapiella.
In February 2025, the company announced a new restructuring plan that will end in 2027, including a workforce reduction of 5,800/7,000, but an adverse environment for the sector and the sharp drop in sales make profitability improvements difficult.
The Cosmetics sector is witnessing numerous corporate operations to compensate for the organic slowdown with inorganic growth through corporate channels that provide scale and synergies. Examples are the acquisition of Kering Beauty by L’Oreal, Rhode by Elf Beauty and the possible sale of CoverGirl and Rimmel by Coty, recalls the Bankinter analyst.
For its part, Jefferies believes that the transaction could be “financially attractive on paper, but less compelling from a portfolio construction perspective,” as it would add complexity amid an ongoing restructuring and does not address security mix behavior or potential category rotation.”
