SCHEDULE: Lauder Family Trusts Sell $1 Billion Estee Lauder Shares

Lauder family trusts completed a significant sale of 11.3 million Class A Common Stock shares of The Estee Lauder Companies Inc. to cover estate tax obligations and trust administration expenses.

Summary

• Three Lauder family trusts (The LAL 2015 ELF Trust, Evelyn H. Lauder 2012 Marital Trust Two, and The Leonard A. Lauder 2013 Revocable Trust) sold a total of 11,301,323 shares of Class A Common Stock of The Estee Lauder Companies Inc.
• The shares were sold to J.P. Morgan Securities LLC, the underwriter, at a price of $89.70 per share, with a public offering price of $90.00 per share.
• The LAL 2015 ELF Trust sold 5,670,000 shares, Evelyn H. Lauder 2012 Marital Trust Two sold 2,845,283 shares, and The Leonard A. Lauder 2013 Revocable Trust sold 2,786,040 shares.
• The proceeds from the sale are intended to satisfy estate tax obligations resulting from Leonard A. Lauder's death and for trust administration expenses.
• Prior to the public offering, on November 3, 2025, ELF and MT2 redeemed their limited partnership interests in LAL Family Partners, L.P. for Class B Common Stock at a price of $89.52 per share, which was then converted to Class A Common Stock on November 4, 2025.
• Following the sale, the reporting persons (the trusts) beneficially own zero shares of Class A Common Stock and ceased to be beneficial owners of more than five percent of the Class A Common Stock.
• The selling stockholders entered into a 90-day lock-up agreement, restricting further sales of Class A Common Stock without the underwriter's consent.

Sentiment

Score: 5

Explanation: The transaction is a neutral event for the company's operational fundamentals, as it's a planned sale by family trusts for estate planning purposes. However, the large volume of shares entering the market could create short-term downward pressure on the stock price, balancing out the sentiment.

Positives

• The sale provides liquidity to the Lauder family trusts to meet significant estate tax obligations and trust administration expenses.
• The transaction was executed through a registered public offering, indicating an orderly market process.

Negatives

• A large block sale of 11.3 million shares could increase the supply of shares in the market, potentially exerting downward pressure on the stock price in the short term.
• The reduction in beneficial ownership by key family trusts might be perceived by some investors as a decrease in insider confidence, although the stated reason is estate tax obligations.

Risks

• The filing details standard indemnification clauses where the Company and Selling Stockholders agree to indemnify the Underwriter against losses arising from untrue statements or omissions in the offering documents, except for information provided by the Underwriter.
• The Underwriter also agrees to indemnify the Company and Selling Stockholders for information they provided.
• The Stockholders' Agreement contains certain limitations on the transfer of shares of Class A Common Stock, which could affect future liquidity for other parties to the agreement.

Future Outlook

The selling trusts intend to use the proceeds from the underwritten sale to satisfy certain estate tax obligations arising from Leonard A. Lauder's death and for expenses of trust administration, with any temporarily unneeded amounts potentially invested.

Management Comments

• The selling stockholders intend to use the proceeds from the underwritten sale to satisfy certain estate tax obligations arising as a result of LAL's death and for expenses of trust administration.
• The beneficiaries of ELF and MT2 do not have the right to, but may receive (at the discretion of the trustee, RFTC), dividends from, or the proceeds from the sale of, the shares of Class A Common Stock.

Industry Context

This transaction represents a significant liquidity event for the Lauder family trusts, driven by estate planning and tax obligations following the passing of Leonard A. Lauder. While a large block sale of shares can temporarily impact market supply, it does not directly reflect changes in the operational performance or strategic direction of The Estee Lauder Companies Inc. Such sales are common for founding families managing generational wealth transfer and tax liabilities.

Comparison to Industry Standards

• The sale of a large block of shares by founding family trusts to cover estate tax obligations is a standard practice in wealth management for long-held public company stock.
• The use of an underwriting agreement and a lock-up period are standard mechanisms to manage the market impact of such a large sale and ensure an orderly distribution.
• The conversion of Class B to Class A shares prior to sale is typical for companies with dual-class share structures, where Class B often carries superior voting rights and is less liquid.

Management Changes

Corporate Governance

Legal Proceedings

• During the last five years, neither the Reporting Persons nor any listed individuals have been convicted in a criminal proceeding (excluding traffic violations) or been a party to a civil proceeding resulting in a judgment, decree, or final order enjoining future violations of, or prohibiting/mandating activities subject to, federal or state securities laws.
• The Company's representations state that there are no legal or governmental proceedings pending or threatened that would individually or in the aggregate have a Material Adverse Effect, other than as set forth in the Registration Statement, Pricing Disclosure Package, and Prospectus.

Related Party Transactions

• The transaction involves the sale of shares by trusts associated with the Lauder family, the founding family of The Estee Lauder Companies Inc.
• The redemption of limited partnership interests in LAL Family Partners, L.P. by ELF and MT2 for Class B Common Stock is a related party transaction, as LAL Family Partners, L.P. is also a Lauder family entity.
• The Stockholders' Agreement, to which various Lauder family members and entities are parties, governs voting and transfer rights of shares.

Stakeholder Impact

• Shareholders: Increased supply of Class A Common Stock in the market due to the large sale could lead to short-term price volatility. The long-term impact depends on market absorption and the company's underlying performance.
• Lauder Family Trusts: The trusts gain significant liquidity to meet estate tax obligations and administrative expenses.
• Company (The Estee Lauder Companies Inc.): The company is facilitating the sale but is not directly raising capital. The transaction does not impact the company's operations or financial health directly, but the change in beneficial ownership by founding family trusts is notable.
• Underwriter (J.P. Morgan Securities LLC): Earns underwriting discounts and commissions from facilitating the sale.

Next Steps

• The Underwriter will proceed with the public offering of the 11,301,323 shares of Class A Common Stock.
• The selling stockholders are subject to a 90-day lock-up period, restricting further sales of Class A Common Stock.
• The proceeds from the sale will be used by the trusts to satisfy estate tax obligations and for trust administration expenses.

Key Dates

Recommendation

This filing details a large, planned sale of shares by Lauder family trusts primarily to cover estate tax obligations and trust administration expenses following a death. It is not indicative of a change in the company's operational performance or future prospects. While the increased supply of shares could create short-term downward pressure on the stock price, the underlying fundamentals of The Estee Lauder Companies Inc. remain unchanged by this specific transaction. Investors should monitor market absorption but base long-term decisions on the company's business performance rather than this family-driven liquidity event.

Keywords

Estee Lauder, Class A Common Stock, Share Sale, Estate Tax, Trusts, Underwriting Agreement, Lock-up Agreement, Lauder Family, SEC Filing, Public Offering