Estée Lauder and Puig end merger talks to create $40bn beauty giant
US cosmetics group Estée Lauder and Spanish perfumery Puig have ended merger talks that would have created a $40bn beauty giant.
Estée Lauder said on Thursday that “the parties have terminated discussions regarding a potential business combination”.
The merger would have combined Estée Lauder’s portfolio of beauty brands, including Clinique and Tom Ford Beauty, with Puig’s Charlotte Tilbury and Jean Paul Gaultier in one group.
However, there were concerns among investors that a deal could have stretched the company’s balance sheet and distract from its turnaround plan. Shares in in Estée rose by more than 10% in after hours trading on Thursday.
Estée chief executive Stephane de La Faverie said in a statement:
We have one of the most powerful portfolios of prestige beauty brands in the world ... and we believe we are uniquely positioned to drive sustainable long-term growth globally.
British shoppers likely to keep spending less, retail body says
The British Retail Consortium has reacted to official retail figures this morning, which showed a drop last month.
Harvir Dhillon, economist at the industry body, said:
We are starting to see signs that concerns over the Middle East conflict and its impact on living costs are leading shoppers to rein in their spending in many areas.
…Discretionary spend is likely to drop further as the cost of living squeeze worsens. To protect consumers and support economic growth in the months ahead, government should avoid further inflationary pressures through domestic policy costs. It can start by cutting non-commodity energy charges, which include the taxes and levies that account for two thirds of retailers’ energy bills, and addressing the triple packaging tax that affects all retailers and their supply chains.”
However, Susannah Streeter, of the broker Wealth Club, notes there are some signs the mood is a little less downbeat than feared.
There’s been a tentative improvement in the closely watched GfK index, though it remains deep in negative territory, rising to -23 in May from -25 in April. Many households, though, have been forced to dip into cash stashes to deal with rising prices, with the savings gauge plunging. Emergency pots will only last so long, and once more bills start to rise, there could be a fresh tightening of spending ahead.
Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK, says public finances are “only likley to get worse.”
It now looks inevitable that government borrowing will soar past the £115.5bn that the OBR expected for this financial year back in March. Indeed, a weaker economy, rising unemployment rate, soaring gilt yields and some additional fiscal support for households and businesses will combine to push borrowing significantly higher this year. We have pencilled in an additional £20bn to £30bn of borrowing this year.
What’s more, if gilt yields remain around current levels through to the next budget, the chancellor will probably lose around £10bn of headroom in 2029/30 against her fiscal rules. That doesn’t preclude a larger bailout now – as long as it is temporary. Instead, the real constraint on borrowing is financial markets. With 10-year gilt yields already above 5% and the budget deficit above 4%, the UK is entering the crisis in a precarious fiscal position.
That tough fiscal picture will remain the same for whoever ends up in Downing Street later this year. The government is facing serious fiscal pressure from the war in Iran. The risk is that a sharp increase in borrowing, and borrowing costs, this year means a bigger adjustment is needed by the end of the decade to stick to the fiscal rules.”
Pantheon Macroeconomics has estimated that debt interest costs in 2026/27 will be about £15bn higher than assumed in the Budget if gilt yields hold at current levels for the rest of the year.
Chief economist Rob Woods said:
Headroom against the fiscal rules would be cut by closer to £10B if half the rise in yields since the Budget is sustained until 2029/20. As best we can tell, political risk has added 20-to-40bp to gilt yields and we suspect will keep borrowing costs more elevated than they otherwise would be this year. Either a more left-leaning Prime Minister will take over, or the current PM will shift further leftwards. Granted, Mr. Burnham will stick to the fiscal rules. But doing so could be hard given the government’s unpopularity, and in any case tax hikes to fund spending plans could undermine growth and worsen the fiscal arithmetic.
Introduction: UK borrowing hits £24.3bn in April; retail sales drop as Iran war weighs on confidence
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK government borrowing hit its second-highest level for April on record, as pressure on public finances continues to grow.
There was a £24.3bn deficit in the UK’s finances last month, official figures showed on Friday.
A poll of economists by Reuters had suggested there would be a £20.9bn deficit for the month.
It will be unwelcome news for the chancellor Rachel Reeves, as the government braces for the full effect of the energy shock in the Middle East and grapples with uncertainty around the Keir Starmer’s leadership.
Grant Fitzner, chief economist at the Office for National Statistics, said:
Borrowing this month was substantially higher than in April last year and although receipts increased compared with April 2025, this was more than offset by higher spending on benefits and other costs.
Borrowing for the latest full financial year was revised down slightly, and on a comparable basis remains the lowest since the year ending March 2020.”
Lucy Rigby, chief secretary to the Treasury, said:
Earlier this week the IMF agreed we had the right economic plan to reduce the deficit.
We are cutting borrowing and debt – with our actions reducing government borrowing by over £20 billion last year - while driving growth through £120 billion of additional capital investment over the Parliament.
Working families have benefited from falls in inflation and cuts to interest rates - and our non-negotiable fiscal rules will be all the more important to continue to protect them as we face the consequences of the war that we have played no part in.
The ONS has also published new figures for retail sales this morning, which showed a 1.3% drop in volumes in April, as more people cut back on their fuel purchases. That compares with an expected fall of 0.6%, according to Reuters.
Fitzner said:
After strong growth last month, motor fuel sales fell in April, with evidence suggesting motorists were conserving fuel after stocking up in March.
These subdued fuel purchases contributed to a sizeable monthly fall for total retail sales in April.
Fuel sales were down 10% in the month, the ONS found. Retail sales excluding fuel declined 0.4% on the month, down across all categories apart from food, where there was a 0.9% rise.
The agenda
7am BST: UK retail sales
7am BST: ONS public finances for April
3pm BST: University of Michigan survey of US consumer confidence
