Estée Lauder companies will adopt the TOM FORD brand (2023)

Tom Ford bond transaction in$2.8 billion

Ermenegildo Zegna Group and Marcolin S.p.A. sign long-term license agreements for TOM FORD Fashion and TOM FORD Eyewear

NEW YORK--(BUSINESS WIRE)--Estée Lauder Companies Inc. (NYSE: EL) today announced that it has entered into an agreement to acquire the world's leading luxury brand, TOM FORD. The Conversion Agreement will make its long-term partner, The Estée Lauder Companies ("ELC"), the sole owner of the TOM FORD brand and all of its intellectual property.

Under ELC's leadership, the acquisition of the TOM FORD brand and expansion of its existing licensing partners will enable the continuity and advancement of the TOM FORD brand as one of the pre-eminent global luxury brands of the 21st century.

The agreement adds value to the company as a whole$2.8 billion. The amount to be paid by ELC for the acquisition is approximately$2.3 billion, without$250 millionPayment to ELC upon closure of Marcolin S.p.A. ("Marcoline"). ELC expects to complete this transaction through a combination of cash, debt and300 million dollarsin deferred payments to sellers due in July 2025 onwards.

ELC benefits include securing the long-term cash flow of ownership of the rapidly growing TOM FORD BEAUTY brand beyond the existing license's expiration in 2030 and eliminating beauty royalty fees at closing, as well as new sources of royalty income and other anticipated synergies. These synergies include creative oversight, increased speed and agility, and opportunities for greater online penetration. ELC expects this transaction to be diluted to adjusted diluted earnings per share ("EPS")¹in the financial year 2023 on (0,05 $) A (0,15 $), mainly from one-off occasional acquisition costs. For fiscal 2024, the transaction is expected to be approximately neutral to adjusted diluted earnings per share. The acquisition is subject to certain conditions, including regulatory approvals, and is expected to close in the first half of 2023.

As part of the agreement, Tom Ford, Founder and CEO of Tom Ford International, will continue to serve as the brand's creative visionary after the closure and through the end of calendar year 2023. Domenico De Sole, President of Tom Ford International, remains as an advisor. until the same hour.

The agreement extends and expands the TOM FORD brand's longstanding relationship with Ermenegildo Zegna N.V. (NYSE: ZGN) ("Zegna" or "Zegna Group") to obtain a long-term license for all men's and women's apparel, accessories and underwear. As part of this transaction, Zegna will acquire the operations of TOM FORD's fashion business necessary to fulfill its obligations as a licensee. ELC and Zegna will closely align with the creative direction to further expand the luxury positioning of the TOM FORD brand.

The brand's existing license with Marcolin, one of the world's leading eyewear manufacturers known for excellence in craftsmanship and quality, was also significantly expanded.

TOM FORD BEAUTY, launched by ELC in 2006, is an iconic luxury beauty brand with a highly differentiated fragrance, makeup and skincare collection that reflects Tom Ford's unique vision of contemporary glamor and is crafted with the highest quality. Founded with an initial luxury fragrance, TOM FORD BEAUTY has since become one of the most successful and emerging beauty brands in the world.

"We are incredibly proud of TOM FORD BEAUTY's success in luxury fragrances and makeup and its commitment to creating high-quality, desirable products for discerning consumers around the world," said Fabrizio Freda, President and CEO of Estée Lauder. companies. “As a private label, this strategic acquisition will open up new opportunities and strengthen our growth plans for TOM FORD BEAUTY. It will also help to strengthen our momentum in the emerging luxury beauty category for the long term, while reaffirming our commitment to be the pure leader in the world-renowned beauty industry.”

TOM FORD BEAUTY is strongly positioned in the luxury makeup and fragrance categories, areas that are expected to outpace industry growth in the coming years. This strategic acquisition supports the next stage of growth for TOM FORD BEAUTY in key luxury markets and online channels around the world. The brand has an impressive track record, including strong double-digit net sales growth on an annualized basis for fiscal years 2012 to 2022. In ELC's fiscal year ended June 30, 2022, TOM FORD BEAUTY achieved growth of net sales of nearly 25% compared to Im The previous year and the next two years, we expect the brand to generate annual net sales ofbillions of dollars. The brand continues to have strong momentum across all major channels and markets, resulting in a prestigious ranking of the top 15 fragrances inThe United Statesand the top 10 inporcelain. The brand has received over twenty awards from The Fragrance Foundation.

Tom Ford says, “I couldn't be happier with this acquisition as The Estée Lauder Companies is the ideal home for the brand. They have been exceptional partners since day one of founding my company and I look forward to seeing them as stewards of luxury in this next chapter of the TOM FORD brand. Ermenegildo Zegna and Marcolin have also been spectacular partners for a long time and I am delighted that the great relationship we have built over the past 16 years continues. I am confident that, with their full commitment, they will continue the brand's future as a luxury company that strives to produce only the highest quality fashion and eyewear.”

Domenico De Sole, co-founder and president of TOM FORD INTERNATIONAL, said: “I am very excited about this acquisition. I look to the Estée Lauder Companies, the first partner on our TOM FORD journey, as the trusted party to continue the exceptional heritage of the TOM FORD brand. Thanks to Tom for his great vision and leadership and our incredibly talented TOM FORD team for their hard work and dedication to the brand.”

"We are honored that Tom Ford has been a part of our ELC family for over fifteen years, from our first collaboration with the Estée Lauder brand to the launch of TOM FORD BEAUTY and its recent achievements," said William P. Lauder, Executive President, The Estee Lauder Companies. "ELC and TOM FORD share a deep appreciation for luxury, creativity, entrepreneurship and a commitment to excellence and, most importantly, the exceptional talent that drives our business."

"We are committed to driving the continued success of TOM FORD BEAUTY, and this exciting acquisition strategically positions us for future growth," said Guillaume Jesel, president of luxury business development for The Estée Lauder Companies. “Tom Ford is a true visionary and the ultimate architect of luxury. Together with the legendary Domenico De Sole, they have created an extraordinary new world of luxury. It's an honor to continue leading the brand and an exceptionally talented team, and manifesting Tom Ford's extraordinary vision of luxurious beauty and beyond."

“We have been partners and shareholders in TOM FORD's fashion business since its foundation. This transaction is our first since our listing in December 2021 and validates our commitment to using our platform to create value for all of our stakeholders,” said Ermenegildo “Gildo” Zegna, CEO of Grupo Ermenegildo Zegna. "We are very inspired by the incredible talent of TOM FORD and are excited to establish this strong and enriching relationship with The Estée Lauder Companies."

“It has been an incredible journey over the past two decades to establish the TOM FORD eyewear business among the world leaders for unrivaled quality and style. We are excited to partner with The Estée Lauder Companies with our exclusive, perpetual license to the brand, which will allow us to continue to support the growth of this incredible brand,” said Fabrizio Curci, CEO of Marcolin S.p.A.

"Tom Ford, Domenico De Sole and their world-class team have built one of the most innovative global luxury brands in the world and we look forward to building its vibrant future," continued Mr. Freda. “Zegna and Marcolin are the ideal long-term fashion and eyewear licensees for TOM FORD. We are thrilled with the continuity they bring to the brand and their unwavering commitment to quality, luxury and craftsmanship will help us lead this brand into the future."

In this transaction, Perella Weinberg Partners LP acted as financial advisor to The Estée Lauder Companies Inc. and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel. Goldman Sachs & Co. LLC acted as exclusive financial advisor to TOM FORD and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor. Zegna received financial advice from UBS. Latham & Watkins LLC acted as legal counsel to Marcolin.

About Estée Lauder Companies Inc.

Estée Lauder Companies Inc.. is one of the world's leading manufacturers, marketers and sellers of premium skin care, makeup, fragrance and hair care products. The company's products are sold in approximately 150 countries and territories under brands such as: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M A C, La Mer, Bobbi Brown, Aveda, Jo Malone London, Bumble and bumble , Darphin Paris, TOM FORD BEAUTY, Smashbox, AERIN Beauty, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIANPARIS, Too Faced, Dr.Jart+ and the DECIEM family of brands, including The Ordinary and NIOD.

About Tom Ford

In April 2005, Tom Ford announced the creation of the TOM FORD brand. Ford was joined by former Gucci Group chairman and CEO Domenico De Sole, who serves as chairman of the company's board. That same year, Ford announced a partnership with the Marcolin Group to manufacture and distribute eyeglass and sunglasses frames, and a partnership with Estée Lauder to create the TOM FORD beauty brand. In April 2007, the first flagship store directly owned by Ford opened.new Yorkon Madison Avenue to coincide with the debut of TOM FORD menswear and accessories. In September 2010, Ford unveiled its highly anticipated women's collection during an intimate presentation at its flagship store on Madison Avenue. In February 2018, Ford debuted the TOM FORD watches and long-awaited lingerie collection on the runway. Today the brand offers a complete collection of menswear, womenswear, accessories, eyewear, beauty items and more recently underwear and watches. Currently, there are over 100 independent and store-in-store TOM FORD stores in locations such as:London,Milan, New York,Beverly Hills,Miami,Las Vegas,Tokyo,Osaka,Only,Montreal,Toronto,Hong Kong,kidnap,Beijing,Neu-Delhi,xian,Doha,kuwait city,RiadjSidney.

About Ermenegildo Zegnagroup

Founded in Trivero in 1910,Italyby Ermenegildo Zegna, Grupo Zegna designs, creates and sells luxury menswear and accessories under the Zegna brand and womenswear, menswear and accessories under the Thom Browne brand. Through its platform of luxury textile laboratories, committed to preserving the artisanal factories that produce the finest Italian fabrics, Grupo Zegna manufactures and sells fabrics and textiles of the highest quality. The Group's products are sold in more than 500 stores in 80 countries around the world, 299 of which are operated directly by the Group as of September 30, 2022 (242 Zegna stores and 57 Thom Browne stores). Over the decades, Grupo Zegna has charted “Our Road”: a unique path that passes through era-defining milestones that have propelled the group from a manufacturer of premium wool fabrics to a global luxury conglomerate. Our path led us tonew York, where the group has been listed on the New York Stock Exchange since December 20, 2021. And as we move forward on our path to the future, we remain committed to upholding our founder's legacy, which is founded on the principle that a company must do something to help the environment. Today, Grupo Zegna creates a lifestyle that keeps pace with modern times, continuing to foster connections with nature and our communities that create a better present and future.

About Marcolin

Marcolin is a leading global eyewear company founded in 1961 and known for its unique ability to combine craftsmanship with advanced technologies through a constant pursuit of excellence and continuous innovation. Brand portfolio includes: TOM FORD, Guess, WEB Eyewear, adidas Sport, adidas Originals, Bally, Moncler, Max Mara, Sportmax, Zegna, Longines, OMEGA, GCDS, Barton Perreira, Tod's, Pucci, BMW, Swarovski, MAX&Co. Kenneth Cole, Timberland, GANT, Harley-davidson, Marciano, Skechers and Candie's. Through its own direct network and global partners, Marcolin sells its products in over 125 countries.

The forward-looking statements contained in this press release, including those in the cited comments and those relating to the completion of transactions and earnings and other expectations for TOM FORD and TOM FORD BEAUTY, involve risks and uncertainties. Factors that could cause actual results to differ from these forward-looking statements include current economic and other conditions, including volatility in the global marketplace, retailer, supplier and consumer actions, competition, transition and continued success of the parties' collaborations, established contingencies in the various transaction agreements, the ability to execute future business plans and the risk factors described in ELC's Annual Report on Form 10-K for the year ended June 30, 2022.

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¹Adjusted diluted earnings per share exclude restructuring and other charges.

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Qual: Estée Lauder Companies Inc.