L'Oréal Is Exploring a Way to Separate Its Beauty Business From Its Legal Problems

L'Oréal is having a very good year financially. Its legal department, however, has considerably less reason to celebrate.

The beauty giant is exploring ways to deal with growing U.S. legal liabilities tied to talc-containing cosmetics and other chemical-related claims, including whether those liabilities could be moved into a separate company and sold to an outside investor.

It is a pretty extraordinary idea for the world's biggest beauty company.

Image via @lorealparis

L'Oréal Has a Legal Problem That Keeps Getting Bigger

L'Oréal's U.S. business is facing hundreds of lawsuits alleging that certain talc-based cosmetic products contained asbestos contamination and caused illness.

As of June 30, around 760 such proceedings were pending in the U.S., up from roughly 620 at the end of 2025. L'Oréal strongly contests those claims.

The company is also facing thousands of lawsuits alleging that chemical hair-relaxer products could cause cancer. In September, Arizona filed a lawsuit against L'Oréal and its U.S. subsidiary, accusing the company of concealing evidence related to the alleged risks.

L'Oréal has previously said it is confident in the safety of its products and considers the claims to lack legal and scientific merit.

Image via @lorealparis

So L'Oréal Is Looking at an Unusual Escape Route

According to the Wall Street Journal, L'Oréal's U.S. division is working with restructuring law firm Weil Gotshal & Manges and investment bank Ducera Partners to explore its options.

One possibility would be to transfer the legal liabilities into a separate corporate entity and then sell that entity to an outside investor.

In other words, the legal exposure would be separated from the operating beauty business.

That doesn't make the lawsuits disappear. It would change who ultimately owns the liabilities and is responsible for dealing with them.

And importantly, this is still an option under consideration, not a deal L'Oréal has announced.

Image via @lorealparis

This Is Giving Big Corporate Shell Game

The strategy might sound bizarre, but it isn't completely unprecedented.

Honeywell recently used a similar structure to separate certain asbestos-related liabilities from its main operations by transferring them to a specialized liability company.

Other beauty and consumer companies have taken different approaches to mass tort litigation. Avon Products entered Chapter 11 proceedings in 2024 partly to address talc-related liabilities, while Johnson & Johnson has spent years fighting and attempting to resolve thousands of talc lawsuits.

L'Oréal's reported exploration of a sale would be particularly notable because it could potentially address the liabilities without putting the operating company itself through bankruptcy proceedings.

Image via @lorealparis

The Timing Is Interesting

None of this means L'Oréal is suddenly in financial trouble.

Quite the opposite.

For the first half of 2026, L'Oréal reported €23.77 billion in sales, up 5.8% on a reported basis, with an operating margin of 21.3% and net profit excluding non-recurring items of almost €4 billion.

The company is also preparing to take over the worldwide beauty license for Gucci from Kering in July 2027.

So this isn't a story about a beauty empire collapsing.

It's about a hugely profitable company trying to keep potentially unpredictable litigation from becoming a permanent part of its corporate structure.

Image via @lorealparis

Beauty's Chemical Past Is Becoming a Very Expensive Conversation

The bigger story here is what happens when products that have been part of people's beauty routines for decades become the center of modern litigation.

Talc has become one of the industry's most complicated legal issues, while hair-relaxer litigation has created another enormous wave of lawsuits involving major beauty companies.

For consumers, that means the ingredients conversation is no longer just about whether something is trending as “clean” or whether a TikTok creator likes the formula.

For beauty companies, the stakes can be considerably higher.

A product can generate billions in sales while creating legal exposure that lasts for years.

Image via @lorealparis

L'Oréal's Beauty Business Isn't Going Anywhere

And that's probably the strangest part of this story.

L'Oréal is simultaneously one of the strongest businesses in beauty and a company trying to figure out what to do with a growing collection of legal liabilities.

The reported strategy isn't about abandoning cosmetics. It's about drawing a line between the enormous business L'Oréal wants to keep building and lawsuits it believes are without merit.

Whether that line can actually be drawn remains to be seen.

But the fact that L'Oréal is exploring how to do it tells you just how complicated the legal side of beauty has become.