The Estée Lauder Companies Inc. (NYSE:EL) (ELC) signed an agreement to acquire Tom Ford International, LLC from Ermenegildo Zegna N.V. (NYSE:ZGN) and others for $2.6 billion on November 15, 2022. 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. ELC expects to fund this transaction through a combination of cash, debt and $300 million in deferred payments to the sellers that become due beginning in July 2025. Tom Ford International, LLC reported total assets of €318.7 million ($331 million), net liabilities of €125.3 million ($130.2 million), net revenues of €221.5 million ($230.1 million) and net income of €12.6 million ($13.1 million) for the year ended December 31, 2021.

Under the agreement, Tom Ford, founder and Chief Executive Officer 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. As part of this transaction, Zegna will acquire operations of the TOM FORD fashion business necessary to perform its obligations as licensee. ELC and Zegna will align closely on the creative direction to continue building on the luxury positioning of the TOM FORD brand.

The acquisition is subject to certain conditions, including regulatory approvals. The European Commission (EC) has cleared without conditions. The transaction is expected to close in the first half of calendar 2023. ELC expects this transaction to be dilutive to adjusted diluted earnings per share (“EPS”) in fiscal 2023 by ($0.05) to ($0.15), primarily from one time acquisition-related costs. For fiscal 2024, the transaction is anticipated to be roughly neutral to adjusted diluted EPS.

Perella Weinberg Partners LP served as financial advisor to The Estée Lauder Companies Inc., and Krishna Veeraraghavan, Laura C. Turano and Claudine Meredith-Goujon of Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel. Goldman Sachs & Co. LLC served as sole financial advisor to TOM FORD and Ann Beth Stebbins, Sarah Knapp, Scott Simpson, David Rievman, Trevor Allen, Kenneth Schwartz, Frederic Depoortere, Joseph Yaffe and Bruce Goldner of Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsels to Tom Ford International, LLC. UBS Investment Bank, Americas acted as the financial advisor to Ermenegildo Zegna N.V. Stefano Sciolla, Todd Gleason, Sarah Gagan, Susan Parker, Ted Dillman, Andrew Galdes, Giovanni Sandicchi, Cesare Milani, Jeffrey Lawlis and Roberto Gaskin of Latham & Watkins LLC served as legal counsel to Marcolin.

The Estée Lauder Companies Inc. (NYSE:EL) completed the acquisition of Tom Ford International, LLC from Ermenegildo Zegna N.V. (NYSE:ZGN) and others on April 28, 2023. At closing, Estée Lauder paid approximately $2.25 billion, with an additional aggregate amount of $300 million in deferred payments from EL to the sellers becomes due beginning in July 2025. This amount was funded by cash on hand and proceeds from the issuance of commercial paper, as well as $250 million received from Marcolin. The remainder of the total enterprise valuation is reflected in the acquisition of TOM FORD FASHION by Zegna Group. As a result of the transaction, The Estée Lauder Companies is now the sole owner of the TOM FORD brand and all its intellectual property.