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Coty is selling a 3.6 per cent stake in haircare brand Wella — worth $150 million — to investment firm IGF Wealth Management as part of its deleveraging strategy.
After the transaction closes, Coty will retain a 22.3 per cent stake in Wella worth approximately $900 million. The deal is expected to complete in the next two months subject to closing conditions.
Coty, which owns beauty brands including Max Factor, Rimmel and Gucci Beauty, says it made the decision to sell part of its stake in an effort to strengthen its balance sheet in order to eliminate debt maturities over the next two years. CEO Sue Y Nabi, who took over in 2020, has been working to boost Coty’s profitability by tackling the company’s debts following an acquisition spree, including the acquisition of Procter Gamble Beauty in 2016 and Kylie Cosmetics in 2019.
Since then, the company has been selling off some brands acquired from P&G (including previously selling a 60 per cent stake Wella in 2020) and investing in higher-growth areas. Meanwhile, Nabi has been leading a turnaround strategy for Coty, focusing on growing its existing brands rather than M&A.
Coty’s sales increased 15 per cent to $1.29 billion in the third quarter of 2023, and it increased its outlook for the full year. The company is considering listing on the Paris Stock Exchange in addition to the New York Stock Exchange in an effort to strengthen its presence in Europe.
On the sale of the Wella stake, Coty chief financial officer Laurent Mercier said in a statement: “The expected transaction is a concrete step in our commitment to both fully divest our retained Wella stake and reach leverage of approximately 2x by end of CY25. Coupling this deleveraging with a best-in-class, medium-term growth algorithm, an active capital return programme — including $400 million in targeted future share buybacks — and the continued momentum in our business, it is clear that we are reinforcing Coty’s position as a beauty powerhouse.”
Separately, Kim Kardashian is reportedly in talks to buy back Coty’s 20 per cent stake in her skincare brand Skkn, according to the Wall Street Journal. Coty declined to comment.
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