March 23 (Reuters) - Estee Lauder is in discussions regarding a potential merger with Barcelona-based beauty group Puig, the companies said on Monday, amid a flurry of dealmaking in the beauty sector.
Shares of Estee Lauder, which has a market capitalization of around $31 billion, closed down about 7% following the news.
Puig, the company behind perfume brands Rabanne, Carolina Herrera and Jean Paul Gaultier, said no agreement has been reached on the potential merger and that there is no assurance
regarding the deal or its terms.
Estee, which is attempting to turn around its business amid sluggish demand in the U.S., had bought U.S. fashion label Tom Ford for $2.8 billion in 2022, its biggest deal so far.
The merger talks follow 2025 deals in the beauty sector, including Hailey Bieber's skincare brand Rhode being acquired by E.l.f. Beauty for about $1 billion.
Gucci-owner Kering.PA> also agreed last year to sell its beauty business to L'Oreal for 4 billion euros, while Coty launched a strategic review of its consumer beauty business, possibly leading to the sale of brands such as CoverGirl and Rimmel.
Estee Lauder and Puig have discussed a combination involving a mix of cash and stock, the Wall Street Journal reported on Monday, citing people familiar with the talks. The Financial Times had also reported that the tie-up would create a $40 billion beauty giant.
Puig, which had completed Spain's biggest initial public offering in nearly a decade in 2024, posted a 12% rise in 2025 net profit last month.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Alan Barona)
