Coty has announced that it will exchange approximately 9% of Wella’s shares with KKR, as well as a portion of the cosmetics manufacturer’s shares owned by the acquiring company.
WHO: Founded in 1880 by Franz Ströher, Wella is a German hair care company headquartered in Geneva, Switzerland, specializing in the professional hair care sector. The business was managed by Procter & Gamble from 2003 until Coty acquired the business in 2015, along with about 40 other of his P&G brands.
Coty is one of the world’s largest beauty companies, with an iconic portfolio of brands spanning fragrances, color cosmetics, hair color and styling, skin and body care. Coty is the world leader in fragrances, #2 in professional hair color and styling and #3 in color cosmetics. Coty’s products are sold in over 150 countries around the world. The Professional Portfolio includes Wella Professionals, System Professional, Nioxin, Sebastian Professional, Londa Professional, Sassoon Professional, Clairol Professional, Wella Color Charm, OPI and ghd.
KKR is a leading global investment firm managing multiple alternative asset classes including private equity, energy, infrastructure, real estate and credit, with strategic partners managing hedge funds.
why: The transaction, which is expected to close in the second quarter of Coty’s fiscal year 2022, will help Coty simplify its capital structure and save $52 million annually while boosting earnings.
Deborah Aitken, consumer analyst at Bloomberg Intelligence, said: “Coty’s partial exit from professional hair care last year with its spin-off from Wella into KKR has paid off. It will also help us further unwind our bloated balance sheet.”
In their own words: Coty Chief Financial Officer Laurent Mercier said in a statement: Use the expected increase in Wella’s value over time to further the dual agenda of de-leveraging and simplification of Coty’s capital structure, with the added benefit of improving cash flow and facilitating EPS growth That’s the strategy. ”
detail:
- Coty exchanged approximately 9% of Wella’s shares with KKR to acquire a portion of KKR’s stake in the cosmetics manufacturer.
- Coty will redeem approximately half of KKR’s outstanding convertible preferred stock and any outstanding dividends as payment.
- The transaction will reduce Coty’s stake in Wella to approximately 30.6%, valuing it at approximately $1.38 billion.
- Following the transaction, KKR’s stake in Coty will be reduced to approximately 5.2%, representing approximately 45 million Coty Class A shares.
- Last year, Coty entered into a strategic partnership with global investment firm KKR to sell a 60% stake in its professional beauty and retail hair business in a transaction worth $4.3 billion, or 12.3x 2019 EBITDA Did.
