Coty reaches strategic deal for its beauty and retail hair business

2 June 2020 (Last Updated June 2nd, 2020 16:03)

Cosmetics company Coty has reached a strategic deal for its professional beauty and retail hair business with investment firm KKR.

Coty reaches strategic deal for its beauty and retail hair business
The divesture will enable Coty to focus on Prestige and Mass Beauty with increased cost competitiveness. Credit: Donald Lee Pardue.

Cosmetics company Coty has reached a strategic deal for its professional beauty and retail hair business with investment firm KKR.

The transaction also includes the Wella, Clairol, OPI and ghd brands, valued at $4.3bn on a cash and debt-free basis.

Last month, the cosmetics maker announced a strategic partnership with KKR to simplify its portfolio, focus on cost competitiveness and deleverage its balance sheet.

The two parties also signed a Memorandum of Understanding (MOU) for the sale of a majority in the company’s beauty and retail hair business including Wella.

Under the MOU, Wella will operate as a standalone company. The separately managed entity will be 60% owned by KKR and the remaining 40% to be held by Coty.

The company will receive $750m convertible preferred equity investment immediately from KKR, which will also make an incremental convertible preferred investment of $250m in the former.

Coty chairman Peter Harf will assume the additional role of Chief Executive Officer in the new entity.

Harf said: “I’ve known Coty for a long time and there is a lot of potential within this company. I’m delighted to return to an active leadership role.

“We are all energised by the task ahead – to lead Coty to the best it can be. Further, in KKR, we have a world-renowned investor that will work alongside us in transforming Coty.”

For Coty, the divesture will allow it to focus on its core Prestige and Mass Beauty businesses.