M&A a high priority for Estée Lauder

With sales up 13% in record breaking results​ and a strong cash balance, company CFO Tracey Thomas Travis says that “M&A is a high priority for​ [Estée Lauder]”​.

“We have locked the activity going on in terms of looking at acquisition opportunities and we want to reserve flexibility for M&A activity,”​ she says.

Following this up, company CEO Fabrizio Freda adds that while the company cannot speak of individual brand or market opportunities, the overall M&A strategy is looking at brands with a global potential.

Strategy​

“As you know we don’t have a strategy of weak M&A partnership but rather it is about buying brands that we can develop over the years,”​ he says.

Estée Lauder has a history of takeovers and devloping big name brands, as Freda refers to; such as make-up brands Bobbi Brown and MAC Cosmetics, which were once smaller companies that were revolutionized by the New York-headquartered beauty behemoth.

“MAC is the example of the ideal acquisition strategy for a settled company: buying a medium-sized brand and making it huge over the years - that’s our strategy in M&A,”​ he continues.

It has been almost four years since Estée Lauder’s last acquisition - Smashbox Beauty Cosmetics in May 2010 - and it appears brands with global potential, particularly in skin care, are the target.

Skin care in Asia makes sense​

The Estée Lauder boss states that a skin care acquisition on a global scale makes the most sense, particularly in Asia as it is a market with the most opportunities, as it is highly profitable and an area where the company’s portfolio not completely fulfilled.

“Our M&A strategy​ [is] about buying amazing brands with amazing potential that we can leverage thanks to our great R&D and global reach,”​ adds Freda.

“That’s what we are looking for. We are scanning the global market continuously for opportunities and we want to keep the flexibility to engage in these activities when the opportunity arises.”​