According to two sources familiar with the matter, French luxury group Kering, known for brands like Gucci, is poised to sell its beauty division to L'Oreal Co.

One source confirmed that the deal is valued at approximately $4 billion, aligning with previous reports.

The report indicates that L'Oreal, the world's largest professional cosmetics and beauty company, will acquire the perfume brand Creed through this transaction and gain the rights to develop beauty products for Kering's fashion brands, including Bottega Veneta, Balenciaga, and Alexander McQueen. It is also noted that the deal may be officially announced next week.

Kering is controlled by the French Pinault family, and its beauty division was established in 2023, the same year Kering acquired the high-end perfume brand Creed for €3.5 billion (about $4 billion) in cash.

Kering declined to comment on the matter, and L'Oreal also did not respond immediately to requests for comment.

This sale represents an important step taken by newly appointed CEO Luca de Meo (who officially took office in September) to address the group's high debt issues that have raised concerns among investors.

As of the end of June, Kering's net debt stood at €9.5 billion.

Despite Kering's efforts to reverse the declining sales trend of its flagship brand Gucci, progress has been limited as the luxury market has faced severe impacts from reduced consumer demand.

Since Kering announced De Meo's appointment as CEO in mid-June, the company's stock price has surged by approximately 60%.

Additionally, reports suggest that representatives from Armani Group have reached out to L'Oreal. The late designer Giorgio Armani had previously designated L'Oreal as one of the preferred buyers for minority stakes in his fashion brand in his will.