MILAN — The deal for Dolce & Gabbana’s fragrance license is reportedly close to being signed.

Procter & Gamble is said to have emerged as the front-runner to challenge Euroitalia for the rights to renew the license, which will expire at the beginning of 2006. Euroitalia put Dolce & Gabbana on the world beauty map during the last decade as the holder of the license.

Rumors about a possible change in license have been swirling for at least a year. L’Oréal was thought to be the original suitor, then Procter & Gamble entered the picture, and even Estée Lauder was mentioned.  P&G is thought to have edged out Lauder and L’Oréal in competition by brandishing an eye-opening offer, which sources say is $100 million up front and includes a royalty of 10 percent.

Procter & Gamble declined comment, as did Euroitalia, Dolce & Gabbana and Lauder. It is understood, however, that Euroitalia is continuing to hold talks with D&G and pursuing its bid to renew the license and hold onto the business it built.

The design house is expected to announce the new license holders of the fragrance division at its 20th anniversary celebration in September, said a source close to the designers.

An unnamed source said Euroitalia would continue distributing D&G fragrances until the end of the second quarter of 2006 — at the designers’ request.

Despite claims by industry sources in Paris, New York and Milan that Procter & Gamble has already signed the deal, some insiders said nothing had been inked yet.

“Giovanni Sgariboldi [head of Euroitalia] is a smart businessman. He has taken that brand from the beginning and is responsible for a major part of its success; he is tough; he has overcome losing this license before, and he might do it again. Don’t write him off yet,” said an industry executive.

If Procter & Gamble were to acquire the license, it would be added to the company’s growing fine fragrance portfolio, which includes Hugo Boss, Laura Biagiotti and, most recently, the Valentino fragrances.

This story first appeared in the February 18, 2005 issue of WWD. Subscribe Today.