French cosmetics group L'Oreal struck a deal with Brazil's Natura & Co to buy Aesop, its Australian luxury brand, at an enterprise value of $2.53 billion, both firms said on Monday.

The deal expands L'Oreal's presence in the luxury cosmetics market, while marking a financial relief for the Brazilian firm, burdened by shrinking margins and heavy debt.

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.

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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".

"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.

For Natura, the deal adds to a broader organizational shakeup that saw former chief executive and executive chairman Roberto Marques step down in June last year, handing over the reins to Fabio Barbosa.

The firm said the sale will support its financial deleverage and focus on strategic priorities such as the integration of its Latin America operations, "as well as the further optimization of Avon International's footprint and the continued improvement of The Body Shop's business".

The acquisition, which is subject to regulatory approvals, will be paid in cash on its closing date, expected in the third quarter of 2023, Natura said.