Key Takeaways:Analysts warn L’Oréal’s vast brand portfolio may be reaching its limits.L’Oreal €4 billion deal for Kering Beauty would still leave it room to acquire other brands. Deal to heat up M&A strategies among beauty players of all sizes.Kering and L’Oréal last week sealed one of the biggest beauty deals in years, valued at €4 billion ($4.69 billion), just days before unveiling their quarterly results amid a mixed outlook for luxury and beauty. The tie-up raises questions over whether L’Oréal is becoming too large—and how rivals might rise to meet the challenge.The Paris-based companies on Monday announced the sale of niche fragrance house Creed to L’Oréal, as well as a 50-year exclusive license to develop beauty lines for Bottega Veneta and Balenciaga under the beauty giant’s umbrella. The agreement also grants L’Oréal an option for Gucci Beauty—currently licensed to Coty until at least 2028, and a 50/50 joint venture in the wellness and longevity categories. First reported over the weekend and confirmed in a joint statement, Kering’s newly appointed CEO, Luca de Meo, and L’Oréal CEO Nicolas Hieronimus shared LinkedIn photos of themselves smiling and shaking hands in celebration.Still, markets remained cautious: Kering’s shares rose 4% on Monday but ended down 3.9% on Friday following a 10% drop in quarterly sales. L’Oréal slipped about 1% on the day of the announcement and ended the week down 0.2% after logging sales growth that came below analysts' expectations—a sign that investors expect results from the transaction only over the medium term.