BUSINESS: Financial With Estee Lauder's Acquisition of Tom Ford Brand, Marcolin Announces a New Long-Term License for Tom Ford Eyewear By Staff Wednesday, November 16, 2022 12:30 AM NEW YORK and LONGARONE, Italy—Late yesterday, The Estée Lauder Companies Inc. (NYSE: EL) (ELC) announced that it has signed an agreement to acquire the Tom Ford brand, a global leader in luxury. The major deal will establish that ELC, a long-term partner of Tom Ford in the beauty arena, will be the sole owner of the Tom Ford brand and all its intellectual property. Under the stewardship of ELC, the purchase of the brand and the extension of its current licensing partners, including Marcolin S.p.A. for eyewear and Ermenegildo Zegna for fashion, "will allow for continuity and the further evolution of the Tom Ford brand as one of the preeminent global luxury brands of the twenty-first century," ELC's announcement said.The deal values the total enterprise at $2.8 billion. The amount to be paid by ELC for the acquisition is approximately $2.3 billion, net of a $250 million payment to ELC at closing from Marcolin S.p.A. Within moments of Estee Lauder Companies' announcement, Marcolin S.p.A. issued its own, stating that the group will enter a new long-term license with ELC for Tom Ford Eyewear. "This represents a substantial extension of Marcolin’s current license with Tom Ford. The new license agreement will be perpetual and provides for an upfront payment by Marcolin of $250 million to Tom Ford, which at the time will be owned by ELC. This will be funded by a combination of cash on balance sheet and a capital increase of at least €50 million by Marcolin’s shareholders. This license is contingent upon the closing of the acquisition," which is expected to occur during the first half of calendar 2023," the announcement said. In the ELC statement, Marcolin's CEO, Fabrizio Curci, stated, “It has been an incredible journey over the last two decades to establish the Tom Ford eyewear business among the global leaders of unparalleled quality and style. We are thrilled to work with The Estée Lauder Companies with our exclusive and perpetual license for the brand, which will allow us to further support the growth of this amazing brand." ELC itself expects to fund the Tom Ford transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning in July 2025. The company said benefits to it from the deal include securing the long-term cash flow from owning the fast-growing Tom Ford Beauty brand beyond the existing license expiration in 2030 and the elimination of royalty payments on beauty upon closing, as well as new licensing revenue streams and other anticipated synergies. Under the agreement, Tom Ford, founder and CEO of Tom Ford International, will continue to serve as the brand’s creative visionary after closing and through the end of calendar 2023. Domenico De Sole, chairman of Tom Ford International, will stay on as a consultant until that same time. The deal will extend and expand the Tom Ford brand’s long standing relationship with Ermenegildo Zegna N.V. (NYSE: ZGN) to include a long-term license for all men’s and women’s fashion as well as accessories and underwear. Designer Tom Ford stated, “I could not be happier with this acquisition as The Estée Lauder Companies is the ideal home for the brand. They have been an extraordinary partner from the first day of my creation of the company and I am thrilled to see them become the luxury stewards in this next chapter of the Tom Ford brand. "Ermenegildo Zegna and Marcolin have been spectacular long-standing partners as well and I am happy to see the preservation of the great relationship that we have built over the past 16 years. With their full commitment, I trust they will continue the brand’s future as a luxury company that strives to produce only the highest quality fashion and eyewear,” Ford said. “We are honored that Tom Ford has been part of our ELC family for more than 15 years, from our first collaboration with the Estée Lauder brand to the launch of Tom Ford Beauty and through its most recent successes,” said William P. Lauder, executive chairman, The Estée Lauder Companies.