Puig, Estée Lauder Weigh Stake Tweaks Ahead of Merger

Key Moments

Strategic Talks on Governance and Control

The families behind Puig and Estée Lauder are assessing how to align their respective stakes in a potential combined company, Expansion reported, citing unnamed sources. The discussions focus on how to recalibrate governance and voting power so that Puig achieves greater influence in the ownership structure of any future merged entity.

According to the newspaper, the central objective is to narrow the gap between the current position of the Estée Lauder family and the prospective stake that the Puig family could hold if the two beauty groups proceed with a merger.

Share Class Adjustments Under Review

One of the main options being analyzed would rely on changes to Estée Lauder’s share capital. Under this scenario, Estée Lauder would issue new Class B shares, each carrying 10 voting rights, and offer them in exchange for Class A shares held by the Puig family. Estée Lauder’s existing structure gives Class A shares one voting right, while Class B shares provide 10 voting rights.

By contrast, Puig’s current structure grants five voting rights to its Class A shares, versus one voting right for its Class B shares. The contemplated exchange is intended to reduce the disparity in effective control between the two families in the merged company.

Alternative Structures and Use of Financial Flexibility

Expansion also reported that the families are exploring other mechanisms to bring their stakes closer in a merged group. These include the potential creation of new share classes or the use of an asymmetric dividend policy designed to shift the economic balance between the two sides.

The newspaper added that this latter approach would aim to capitalize on Puig’s significantly lower levels of debt relative to Estée Lauder. That financial position could provide additional flexibility in designing a capital and dividend structure that better aligns the two families’ interests and influence.