Tom Ford is a newly minted billionaire thanks to a $2.8 billion deal with Estée Lauder

Hong Kong
CNN Business

A major deal to sell his eponymous fashion brand has catapulted fashion designer Tom Ford into the global billionaires club.

Ford, 61, who launched the Tom Ford brand in 2005 and built it into a luxury clothing and accessories powerhouse, sold his company on Tuesday to the Estée Lauder Companies

in a deal valued at $2.8 billion.

Estée Lauder’s acquisition of Tom Ford Brands is expected to close in the first half of next year, pending regulatory approvals. The deal will fully integrate Tom Ford Brands, which already has an ongoing partnership with the cosmetics and skin care giant, into Estée Lauder’s diverse portfolio.

The two companies have been partners for more than 15 years, having launched the Tom Ford Beauty brand together in 2006.

As a result of the sale, Ford now joins the ranks of global billionaires, According to Forbes, which estimates that the designer, who owns nearly 64% of his company, will receive about $1.1 billion in cash from the sale after deducting estimated taxes. Ford’s existing portfolio also includes at least two homes, one in Los Angeles and one in New York, valued at a total of $65 million, the publication said.

Ford will remain as the brand’s “creative visionary” after the deal closes and will remain in that role until the end of 2023, according to the statement.

Domenico De Sole, president of the Ford brand who previously ran Gucci, will also stay on as a consultant during the same period.

The deal, which will be settled through a combination of cash, debt and deferred payments due in 2025, will allow two of Tom Ford’s current partners, Ermenegildo Zegna and Marcolin, to extend their existing licensing agreements, it said the companies.

Zegna, the luxury Italian fashion house, will expand its current agreement “to include a long-term license for all men’s and women’s fashion, as well as accessories and underwear,” the company said. Marcolin will continue to manufacture sunglasses and optical frames under the Ford brand.

Estée Lauder Companies, which is home to several global beauty brands including Clinique and Bobbi Brown, said that he expects annual sales of Tom Ford cosmetics to reach $1 billion “in the next few years.”

“As a proprietary brand, this strategic acquisition will unlock new opportunities and strengthen our growth plans for Tom Ford Beauty,” Estée Lauder Companies president and CEO Fabrizio Freda said in a statement.

Born in Austin, Texas in 1961, Ford studied art history at New York University and later architecture at the Parsons School of Design in New York and Paris. He moved to Milan in 1990, where he began his career in fashion as a womenswear designer for Gucci. A few years later, he was appointed creative director and responsible for all Gucci product lines, from clothing to perfumes.

During the 10 years in this position, Gucci’s sales increased from $230 million to more than $3 billion. In 2005, Ford struck out on his own and started his own company.

Ford said in a statement that it “could not be happier with this acquisition as The Estée Lauder Companies is the perfect home for the brand.”

“They have been an outstanding partner since day one of my creation of the company and I am thrilled to see them become luxury stewards in this next chapter,” he said.

— CNN’s Parija Kavilanz contributed to this story.

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