Coty has completed its acquisition of the exclusive long-term global license rights for Burberry Beauty luxury fragrances, cosmetics and skincare.
Unique licensing deal
In one of the most significant luxury brand licensing deals of the year, Burberry has agreed to grant a long term exclusive licence to Coty for fragrances and make-up. Coty is to pay £130m up front for the global licence and a one-off £50m for the assets. The deal stands out for at least four reasons: value, bespoke licensing terms leveraging the creative and other talents of both parties, parallel transitional arrangements to facilitate a smooth integration and seamless luxury consumer experience and a fast-paced, confidential transaction executed by large teams on both sides.
Burberry gets creative control
The new licensing arrangement is unusual in that it gives Burberry creative control. In short, it is a unique strategic partnership for both companies, leveraging the iconic Burberry brand and creative talent, together with both parties’ best-in-class creative executions, and Coty’s global capabilities in beauty strategy, innovation, supply chain and go-to-market. In selecting Coty for the deal, Burberry was renewing its focus on distribution through leading luxury beauty retailers, as well as key digital channels.
In 2013, Burberry brought its beauty business in-house after terminating its nearly 20 year licence with the French beauty company InterParfums. The licence negotiations between Coty and Burberry resulted from Burberry’s unique experience in managing a beauty business both in-house and as a licensor and led to the creation of a bespoke licence that reflects these experiences. The licence arrangements also addressed the transition of the Burberry beauty business to Coty to facilitate a smooth integration, including in relation to the management of the supply chain and distribution network, all with a view to a seamless luxury consumer experience.
Out of the box approach
The deal allows Coty to continues on the path of premiumising its portfolio in the luxury division whilst enabling Burberry to focus on its core while also driving growth in the luxury fragrance and make-up sector - benefiting from Coty’s beauty-industry expertise and first-class distribution. The deal reflects the time and care taken to design a distinctive working relationship and out of the box approach to the balance of interests that is at the core of a license partnership.
The legal teams of Burberry and Coty worked closely on the licence arrangements with a view to principles-based negotiations and commitment to find the win-win. Louisa Christoufidou and Marianne Helps of Burberry worked on the transaction from Burberry's side. The Coty team was led by GC Greer McMullen, SVP, Global Business Services & Licensing, Elisheva Jasie and assistant general counsel, M&A Elizabeth Cameron, supported by a team from Freshfields Bruckhaus Deringer, led by partners Giles Pratt and Alison Smith.
Marco Gobbetti, chief executive officer, Burberry, commented: 'Following months of hard work to ensure a smooth transition, we are pleased that this strategic partnership, which brings together tremendous beauty experience and expertise, has begun. Burberry is incredibly proud of what has been achieved in the last four years and we look forward, with the support of Coty, to further building on these foundations.'
Camillo Pane, Coty chief executive officer, said: 'We are pleased to complete this transaction and move forward with our strategic partnership, combining Burberry’s British heritage of innovation, craftsmanship and design with Coty’s expertise and leadership in luxury beauty products. Coty’s world-class ability in developing and bringing to market beauty brands will help drive a new phase of development and growth for Burberry Beauty.'
Coty's Luxury division
Edgar Huber, President of Coty Luxury, added: 'As an iconic luxury brand, Burberry fits perfectly with Coty Luxury’s portfolio, which includes contemporary and globally relevant luxury beauty brands. We are uniquely positioned to develop Burberry Beauty to the next level. This is another significant step in building Coty’s Luxury division.'
Beauty strategy and creative elements
Coty will have overall responsibility for strategic direction on the portfolio’s development, leveraging its global capabilities in beauty strategy, innovation, supply-chain and go-to-market, working in partnership with Burberry who will lead on creative elements. Burberry beauty products will be sold in leading luxury beauty retailers globally as well as in Burberry stores and digital channels.
Luxury Law Summit
Coty and Burberry were awarded 'Deal of the year' at the Luxury Law Summit this year.