Coty and KKR signed an agreement for the sale of a majority in Coty’s Professional Beauty and Retail Hair Businesses including the Wella, Clairol, OPI and ghd brands — at a contemplated enterprise value of $4.3 billion.

Update: As a result of the sale, Coty Names New CEO

Under the terms of the agreement, Coty will carve out its Professional Beauty Division, making it a standalone company, in which KKR will acquire a 60 percent stake and Coty will retain the remaining 40 percent interest.

Coty will receive an immediate investment of $750 million convertible preferred equity from KKR, followed by additional cash proceeds of approximately $3 billion — and then an incremental convertible preferred investment of $250 million.

Coty first announced Plans to Sell Its Professional Beauty Business last October. 

Now In Position for Long Term Growth

Together with the initial $750 million investment, these transactions will result in significant deleveraging of Coty’s balance sheet and position the company for long-term growth and investment in its core portfolio. Coty’s mass beauty business in Brazil will remain a fully owned business of Coty.

Peter Harf, founding partner of JAB and Chairman of Coty, comments, “We are thrilled to enter into this strategic partnership with KKR, one of the world’s preeminent investment firms with an exemplary track record of value creation. Their investment and partnership will be instrumental to strengthening Coty’s balance sheet and helping the company to achieve long-term growth in shareholder value.”

Johannes Huth, partner and head of KKR EMEA, says, “Coty is a leader in the attractive global beauty market with iconic brands, global presence and scale, and a strong track record of innovation and growth.”

Huth continues, “We are excited to form this partnership to invest in Coty to support it through this period of unprecedented global uncertainty and allow it to emerge as a stronger, more agile business, and to acquire a majority stake in Wella, a market leader with a strong portfolio of brands in the attractive professional hair market where we see significant opportunities to accelerate growth in partnership with its experienced leadership team. We look forward to working towards the establishment of a lasting and value-creating strategic partnership.”

Pierre-André Terisse, Coty COO and CFO, adds: “Today’s announcement with KKR provides an increased sense of energy and excitement for all of us at Coty. As part of a number of steps to continue Coty’s transformation, the strategic partnership with KKR is clearly the most game-changing.”

Terisse continues, “We will see immediate improvement to our balance sheet and are in the final stages of finalizing a 60/40 partnership for our Professional Beauty and Retail Hair businesses.”

He adds, “In the shadow of a global lockdown, we have also announced a comprehensive plan to reduce fixed costs by $700 million, which allows us to confirm our target to reach mid teens operating margins by FY23. Overall, this alliance and the steps we are taking to strengthen our businesses will be key elements of our transformation.”

Photos: @Clairol_Pro; OPI; @WellaColorCharm

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