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Estee Lauder To Buy Aveda For $300 Million

November 19, 1997 GMT

MINNEAPOLIS (AP) _ The Estee Lauder Companies Inc. added another well-known brand to its portfolio Wednesday with its $300 million purchase of Aveda Corp., a skin and hair-care products manufacturer.

With the Aveda acquisition, Estee Lauder will sell hair-care products in salons for the first time and capture a strong name in the upscale hair-care market.

``This widens their scope,″ said Amy Low, an analyst at Goldman, Sachs. ``It puts them in another new category, reaching a new consumer that they don’t currently serve.″

The Aveda acquisition follows an announcement earlier this month that Estee Lauder would manufacturer Donna Karan’s beauty line. It also produces Clinique, Aramis, Prescriptives, Origins, MAC, Bobbi Brown essentials, Tommy Hilfiger and jane brands.

New York-based Estee Lauder sells nearly 45 percent of all women’s cosmetics in U.S. department stores and specialty stores.

Aveda, which creates products from organically grown plants and other renewable resources, will become a subsidiary Estee Lauder. Its headquarters will remain in Minneapolis and Horst Rechelbacher will continue as chairman of the company he founded in 1978.

Aveda products are sold through distributors to about 30,000 professional salons in the United States, Great Britain, Australia and Italy.

The deal is expected to close in early December.

``The acquisition of Aveda is another step in our strategy of strengthening our position as a leader in the global beauty business,″ said Leonard Lauder, chairman and chief executive of the company founded 51 years ago by his mother.

Estee Lauder had annual revenues of about $3.4 billion and earnings of $198 million for the fiscal year ended June 30. Aveda declined to release its revenues.