By Scott Murdoch and Mimosa Spencer

SAO PAULO/PARIS (Reuters) -France’s L’Oreal has agreed to buy Australian luxury brand Aesop from Natura & Co for an enterprise value of $2.53 billion, growing its presence in high-end cosmetics with an eye to international expansion, including in China.

For L’Oreal, which owns labels ranging from Maybelline to Lancome, the deal is its largest brand acquisition to date, according to Dealogic data.

It provides Brazil’s Natura, owner of Avon and The Body Shop, with some financial relief from shrinking margins and heavy debt.

Aesop taps into all of today’s ascending currents and L’Oreal will contribute to unleash its massive growth potential, notably in China and travel retail,” L’Oreal CEO Nicolas Hieronimus said in a statement.

The French cosmetics group is known for buying emerging labels, and scaling them up through its global distribution capabilities, Ian Simpson, analyst with Barclays, said, estimating Aesop will add around 1.2% to L’Oreal’s organic sales this year.

Given L’Oreal’s strong track record of creating value from recent acquisitions, we expect this transaction to be helpful to sentiment, despite its limited size relative to L’Oreal,” he said.

The brand, Natura’s most profitable, operates almost 400 stores and posted sales of $537 million in 2022, up 21% in constant currency from a year earlier.

It also reported double-digit growth across all its regions last year, and said it had entered the Chinese market “with strong performance that exceeded expectations.

For Natura, the deal is part of a broader organisational shake-up that saw former chief executive and executive chairman Roberto Marques step down last June to make way for Fabio Barbosa.

Subject to regulatory approvals, the acquisition will be paid in cash, expected in the third quarter of 2023, Natura said.

Established in 1987, Melbourne-headquartered Aesop offers skin, hair and body care products.

(Reporting by Peter Frontini in Sao Paolo, Scott Murdoch in Sydney and Kane Wu in Hong Kong, Mimosa Spencer in Paris; Editing by Sonali Paul, Shri Navaratnam and Barbara Lewis)