Conglomerates are either doing sweeping deals to create amoebic organizations that take up landmass in their categories to squeeze out competition or shedding large portions of their portfolios that have become a drain.

Taking a cue from L’Oréal’s roughly $4.7 billion deal to acquire Kering’s beauty division, The Estée Lauder Companies is reportedly exploring a deal with Puig that could forge a combined company with around 50 brands, a $40 billion market value and roughly $20 billion in annual sales. Responding to news of the possible transaction earlier this week, Puig’s stock rose in the mid-single digits, while Lauder’s fell by high-single digits.

The deal would give both companies a rare opportunity to gain massive scale in prestige beauty and a stronger position to battle L’Oréal. Lauder would benefit from Puig’s historic strength in fragrance—its portfolio includes Byredo and the perfume licenses for Rabanne, Carolina Herrera and Jean Paul Gaultier—and adds a formidable force in makeup with Charlotte Tilbury. The company has struggled in makeup, as its attempts to offload Too Faced and Smashbox suggest.

The market, however, saw the most upside for Puig, which is roughly a third of the size of Lauder by sales. The merger would provide it with greater presence in skincare, a category it has long tried to penetrate further, and a deeper global footprint.

A major obstacle to the deal could be governance. Puig and Lauder are controlled by founding families, complicating any agreement on leadership and structure. Beyond that, integrating a skincare-heavy, operationally centralized company with a fragrance-led group holding key licenses would be a significant test. Enormous integrations have a mixed track record in beauty (see Coty’s acquisition of 43 Procter & Gamble brands).

Industry insiders have also questioned what the deal would mean for brand stewardship at a time when challenger brands are siphoning market share from incumbents. Puig has developed a reputation as a strong home for brands like Charlotte Tilbury and Byredo, building on their DNA even within a larger organization. Lauder, by contrast, has struggled to integrate younger, fast-moving brands.

Although completion of the merger remains uncertain, for this edition of our ongoing No Stupid Questions series, we’re assessing its viability. We asked 13 investors, investment bankers and consultants the following: What do you see as the biggest benefits and drawbacks for each party? Can these two beauty juggernauts realistically integrate without losing focus? What does this deal signal about the state of growth in prestige beauty today? What are the future implications for M&A? Does it accelerate consolidation across the category or create new opportunities for smaller players?