A proposed $41 billion merger between Estée Lauder and Spanish beauty group Puig has triggered sharply divergent market reactions, with Puig shares jumping 14% while Estée Lauder's fell 8%. The deal would mark a significant shakeup in the global beauty industry, combining Estée Lauder's luxury skincare portfolio with Puig's fragrance and fashion brands.

Puig, which floated less than two years ago, would benefit from a premium valuation that could restore investor confidence. The Barcelona-based company, controlled by its founding family's third generation, has struggled to maintain its listing price despite owning brands like Charlotte Tilbury and fragrances from Carolina Herrera and Jean Paul Gaultier. However, the timing poses challenges for newly appointed CEO José Manuel Albesa, who took the helm just a week ago.

For Estée Lauder, investors appear wary of absorbing a new collection before completing its current restructuring. The 80-year-old beauty giant had been gaining momentum, with shares up 29% in the past year outperforming major rivals. While the merger would reduce Estée Lauder's Asia reliance from 50% to one-third and improve product balance, investors seem concerned about integrating two family-controlled companies with distinct challenges.