Investing.com -- Estee Lauder (NYSE: EL) shares fell over 4% Monday afternoon following a Financial Times report that the cosmetics company is nearing a deal to combine with Spanish beauty group Puig.

The potential tie-up would create a company valued at more than $40 billion, bringing together two major names in the beauty industry, according to people familiar with the matter cited by the Financial Times.

Puig owns brands including Jean Paul Gaultier, Dries Van Noten, Rabanne, and Charlotte Tilbury.

The exact terms of the potential combination were not known, and people familiar with the matter said the deal could still fall apart. An announcement could come as early as Monday, according to the report.