Gucci owner Kering has agreed to sell its beauty business to L'Oreal for 4 billion euros ($4.66 billion), the company said on Sunday, as new CEO Luca de Meo moves to tackle the luxury group's high debt and refocus on its core fashion business.

Under the deal, French beauty giant L'Oreal will acquire Kering's fragrance line Creed, as well as rights to develop products under Kering's fashion labels Bottega Veneta and Balenciaga under a 50-year exclusive license. The sale is a major step towards reducing Kering's net debt, which stood at 9.5 billion euros at the end of June, adding to 6 billion euros in long-term lease liabilities, sparking investor concern.

The company has struggled to reverse declining growth at its largest brand Gucci, which was hit hard by slowing demand in the key Chin

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