L’Oréal is buying Australian luxury brand Aesop for $2.5 billion USD, the biggest brand acquisition in the French cosmetic giant’s history.

The L’Oréal deal, which is expected to be finalized in Q3 of this year, was announced by Aesop’s parent company Natura & Company, which also owns The Body Shop and Avon. Aesop’s line of skin, hair and body products are known for being vegan-friendly, and were among the earliest to tap into the trend of incorporating essential oils and other natural ingredients into its products.

“Aesop taps into all of today’s ascending currents,” says Nicolas Hieronimus, CEO of L’Oréal, “L’Oréal will contribute to unleash its massive growth potential, notably in China and travel retail.”

Aesop was founded in Melbourne in 1987 and acquired by the Brazil’s Natura in 2016.  It has built its brand largely with a word-of-mouth approach that has since been adopted by other luxury beauty and lifestyle brands, driven by the environment of its retail locations, minimalist branding, product reviews and apothecary-like package design.

Aesop entered the Canadian market in 2015, with its first retail locations opening in Vancouver’s Gastown and Toronto’s Queen West neighbourhoods, thereafter expanding into Montreal, Ottawa and Calgary with standalone stores. After a streak of new openings in 2021, it now operates 17 stores in Canada, with its products also sold at retailers such as Saks Fifth Avenue, Holt Renfrew and – until it ends Canadian operations this June – Nordstrom.

In its latest earnings call, Natura reported a $169.7 million USD loss for Q4, with large revenue drops for both Avon and The Body Shop, but with Aesop getting double digit growth in constant currency. However, according to Natura CEO Fabio Barbosa, unloading Aesop would help the company reduce its debt load.

“With a strengthened financial structure and a deleveraged balance sheet, Natura & Co, exercising strict financial discipline, will be able to sharpen its focus on its strategic priorities, notably our investment plan in Latin America,” Barbosa noted.

By contrast, in its latest quarter, L’Oréal posted strong numbers, particularly in South America, with global revenue growth 18.5% higher than the year prior.