Tom Ford’s $2.8 billion deal to sell his fashion brand to Estee Lauder makes him a billionaire | Rare Techy

Estée Lauder’s deal to acquire fashion company Tom Ford has made its founder a new billionaire. The cosmetics giant said Tuesday it would buy the fashion brand for $2.3 billion in cash and debt, plus $300 million in deferred payments that will be paid out starting in July 2025. The deal values ​​the company at $2.8 billion, including $250 million for Estée. Lauder is sourced from Marcolini, an Italian eyewear brand that has licensed Tom Ford’s line of eyewear.

Forbes estimates that the 61-year-old Ford will receive about $1.1 billion in cash from the sale of its nearly 64% stake after estimated taxes. (The deal is expected to close in the first half of 2023.) It will also earn another $191 million (pre-tax) from deferred payments starting in July 2025. This is joined by at least two homes, including one in Holmbys Hills, Los Angeles, and another in New York’s Upper East Side, which are worth $65 million. In total, Ford is currently worth an estimated $1.2 billion.

He’s not the only one who made money from the sale. Italian luxury goods retailer Zegna held a 15% stake in the company, worth an estimated $345 million (pre-tax). Ford’s longtime business partner Domenico De Sole owned just over 11% of the company, which is now worth $259 million, according to a 2013 filing. (before tax.) Grupo Americo Amorim, the Portuguese conglomerate founded by the late billionaire “King of Cork” Americo Amorim (d. 2017), owned the remaining 10%, which is now worth $230 million before taxes.

Tom Ford reported a profit of $96 million on sales of $1.7 billion in 2021, according to the latest annual report from publicly traded Zegna, which retains the brand’s long-term license for apparel and accessories. Last year saw a turnaround from 2020 and 2019, when the brand made a net loss. Tom Ford has 98 stores in several countries, including China, Italy, Japan, Russia, Switzerland and the United Arab Emirates.

Ford will remain a “creative visionary” until the end of 2023, according to a press release announcing the deal. “I couldn’t be happier about this acquisition as The Estée Lauder Companies is the perfect home for the brand,” Ford said in a statement. “They have been an exceptional partner since day one of my company and I am delighted to see them become the luxury stewards of the next chapter of the Tom Ford brand.”

Born in Austin, Texas in 1961, Ford grew up in Santa Fe, New Mexico before moving to New York to study art history at NYU. He then transferred to Parsons School of Design, where he studied architecture at the university’s New York and Paris campuses. Her interest in fashion is said to have started when she took a year off from university to work in the press office of French luxury fashion house Chloé in Paris. After graduation, he got a job with sportswear designer Cathy Hardwick.

Ford got his first big break in 1990 when he moved to Milan as a womenswear designer for Gucci. He quickly rose through the ranks, becoming design director in 1992 and creative director of the brand in 1994. It was at Gucci that he met his current business partner, Domenico De Sole, who was the company’s CEO at the time. In 1995, the couple helped get Gucci listed on the Amsterdam and New York Stock Exchanges.

But the public offering put the company in the crosshairs of fashion titans sniffing out an opportunity. In January 1999, Bernard Arnault—chairman and CEO of luxury conglomerate LVMH, now worth an estimated $176.1 billion—acquired a plus 5% stake in Gucci. Soon after, Arnault bought another 9.5% stake from Prada’s billionaire co-chairman, Patrizio Bertelli. By February, LVMH held 26.7% of Gucci shares. “The man just asked himself to dinner without calling in advance,” said De Sole Forbes referring to Arnault at the time.

A month later in March 1999, another French fashion billionaire – François Pinault, founder of luxury group Kering, now worth an estimated $36.8 billion – bought a 40% stake in Gucci for $3 billion, or $5.4 billion in today’s dollars. This helped Gucci expand and acquire Yves Saint Laurent in 2000, Ford was elevated to creative director of the entire group. But the battle between the two French moguls for control of Gucci continued for two more years until 2001, when Pinault bought half of Arnault’s stake in Gucci for $752 million ($1.3 billion adjusted for inflation) and agreed to buy out the remaining Gucci shares in 2004.

From 1994—when Ford became Gucci’s creative director—to 2003, Gucci’s sales grew nearly 1,200% to nearly $3 billion. Ford and De Sole oversaw Gucci’s acquisition of luxury brands including Balenciaga and Bottega Veneta. But Ford left Gucci shortly after Pinault completed his takeover in April 2004, reportedly over disagreements over control of the company.

In March 2005, Ford spun off and established its own brand, with De Sole joining as chairman of the new company. (He also founded the film production company Fade to Black and directed and produced the 2009 film A single man, which starred Colin Firth and Julianne Moore and received an Oscar nomination for Firth.) Ford’s first flagship opened in New York in 2007, the same year it sold a 25% stake in the brand to Grupo Amorim for an undisclosed sum. In 2015, Amorim sold 15% to Zegna, leaving him with 10% of Tom Ford.

Over the years, Ford has also invested in art and real estate: In 2010, he reportedly sold a self-portrait of Andy Warhol for $32.6 million. He also owned the 20,662-acre Cerro Pelon Ranch in New Mexico, which was the location for movies, including Silverado and Thor– until he sold it in January 2021 for an undisclosed sum. Two months later, he also sold a four-story Victorian mansion in London’s luxurious Chelsea neighborhood for $17 million.

It’s unclear what Ford’s future holds after 2023, when his role at Estée Lauder ends. Whatever he decides to do, the newly minted billionaire is flush with cash.