*

WSJ says L'Oreal would acquire Creed and rights to

Kering's

fashion labels for $4 billion

*

Kering's beauty division launched in 2023

*

Sale could help address Kering's high-debt issue under CEO

Luca

De Meo

(Adds sources, details about Kering share price, possible

Armani sale)

By Lisa Jucca and Abigail Summerville

MILAN/NEW YORK, Oct 18 (Reuters) - French luxury group

Kering, owner of fashion brand Gucci, is nearing a

sale of its beauty division to L'Oreal, according to

two people familiar with the situation.

One of the sources confirmed the deal would be worth around

$4 billion, as per an earlier report by the Wall Street Journal,

which was first to report the development.

L'Oreal, the world's biggest dedicated cosmetics and beauty

player, would acquire fragrance brand Creed and gain rights to

develop beauty products tied to Kering's fashion labels,

including Bottega Veneta, Balenciaga, and McQueen, the WSJ

reported, adding the deal could be announced next week.

Kering, controlled by the French Pinault family, launched

its beauty division in 2023, the year it acquired high-end

fragrance label Creed for 3.5 billion euros ($4 billion) in

cash.

Kering declined to comment and L'Oreal did not immediately

respond to a Reuters request for comment.

A sale would be a major step forward by new CEO Luca De Meo,

who officially took office in September, to address a high-debt

issue that had sparked investor anxiety.

Kering's net debt was 9.5 billion euros at the end of June.

The company has struggled to reverse slowing sales at its

largest brand Gucci as the luxury market has been hard hit by

lower consumer demand, especially in China, which had led growth

in the sector for more than a decade.

Since Kering announced De Meo's appointment in mid-June,

shares in the company have surged by around 60%.

L'Oreal has also been approached by representatives of

Armani Group, Reuters reported this month, after the beauty

conglomerate was named in the will of late designer Giorgio

Armani as one of the preferred buyers for a minority stake in

his fashion house.

($1 = 0.8583 euros)