Kering SA agreed to sell its beauty division to L’Oreal SA as part of a long-term strategic alliance, with Chief Executive Luca de Meo seeking to turn around the French luxury giant’s fortunes.

The owner of fashion brands including Gucci said the deal aims to accelerate growth, according to a statement issued by both companies on Sunday night.

The deal is valued at €4 billion ($4.7 billion), according to the statement.

Kering launched its beauty division in 2023. The company acquired high-end fragrance label Creed that year for an estimated €3.5 billion to build its beauty platform, but it has been dealing with more pressing issues ever since.

As part of the deal, L’Oreal, the world’s biggest dedicated cosmetics and beauty player, would add Creed to its portfolio.

“Joining forces with the global leader in beauty, we will accelerate the development of fragrance and cosmetics for our major houses, allowing them to achieve scale in this category and unlock their immense long-term potential,” de Meo said in the release.

The sale is the first strategic move by de Meo, who officially stepped into the role in September, as Kering confronts a slump in Chinese demand and the threat of higher US tariffs. The group’s high debt burden has also sparked investor anxiety.

The CEO, who took over from Francois-Henri Pinault, is expected to unveil his strategic vision next spring. The Pinaults are the majority shareholders of Kering with a 42% stake and 59% of voting rights.