L’Oréal to pay $3.7bn for Melbourne-founded luxury cosmetics brand Aesop

French skincare company L’Oréal will pay US$2.5bn ($3.7bn) to buy Melbourne-founded Aesop, a luxury cosmetics, shampoo and bodycare brand that has worked its way into luxury hotels and bathrooms around the world.

The deal is designed to help Aesop’s Brazilian owner, Natura &Co, pay down debt, with the price tag showcasing the runaway value of a brand founded by Melbourne hairdresser, Dennis Paphitis, in 1987.

The sale represents the largest known price tag for a luxury brand founded in Australia.

L’Oréal chief executive, Nicolas Hieronimus, described Aesop as a “superb combination of urbanity, hedonism and undeniable luxury”.

“Aesop taps into all of today’s ascending currents and L’Oréal will [continue] to unleash its massive growth potential, notably in China and travel retail,” Hieronimus said.

Aesop opened its first physical store in mainland China last year.

The sale comes after months of negotiations that included interest from rival French brand LVMH, the luxury goods empire headed by the world’s richest person, Bernard Arnault.

Aesop had been under majority control of Natura for more than a decade. The sale comes amid an overhaul of the Brazilian company’s operations after a troubled period of expansion and accumulating a heavy debt burden.

It plans to focus on other business units, including Avon and The Body Shop.

“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,” said Natura chief executive Fabio Barbosa.

Sold across 29 countries, Aesop products have carved a highly profitable niche in the luxury market that extends to first-class airline amenity kits. According to Natura figures, between 2012 and 2022 gross sales increased from US$28m to US$537m.

Its products are not cheap. A 100ml bottle of parsley seed facial cleanser sells for $47 in Australia, while a 60ml post-shave hydrator containing sandalwood retails for $65.

Natura took a controlling stake in Aesop in 2012, paying US$68m, and by late 2016 had taken full control.

Aesop chief executive, Michael O’Keefe, said he expected the business to grow under its new French owners as part of the brand’s next phase of development.