Coty has agreed to dispose of its remaining 25.8% stake in professional haircare group Wella to investment funds and accounts managed by US investment firm KKR.
The move completes the divestment plan the beauty group launched in 2020, and under the disclosed terms Coty will receive an upfront cash payment of $750m.
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In addition, Coty will retain the right to 45% of any proceeds from a future sale or initial public offering of Wella, once KKR has achieved its preferred return.
Coty stated that, considering Wella’s recent and projected performance and prevailing market valuations, there is scope for further cash inflows from this arrangement.
These additional proceeds could bring the total gross return from the Wella transaction closer to the book value of Coty’s investment.
Coty said it anticipates that the transaction will contribute to lowering its financial net leverage to around 3x by the end of CY25, supporting its objective of moving towards a leverage ratio of 2.0x.
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By GlobalDataThe company plans to allocate the bulk of the upfront cash, after tax, towards paying down both short- and long-term borrowings.
It added that the Wella-related proceeds, combined with expected free cash flow of more than $350m in the first half of FY26, in line with recent guidance, should underpin its deleveraging efforts.
Coty CFO Laurent Mercier said: “This transaction marks a pivotal milestone for Coty – both in our transformation and in our long-running deleveraging commitment. Our strategic partnership with KKR has proven highly value accretive. We have benefited from Wella’s strong growth by progressively monetising our stake, allowing us to strengthen Coty’s financial foundations year-after-year.”
Coty is a beauty company founded in Paris in 1904, offering fragrance, cosmetics, and skin and body care brands sold in more than 120 countries.
In October, Coty embarked on a strategic review of its consumer beauty segment, stating that it aimed to “unleash its full potential”.
The review focused on the company’s $1.2bn revenue mass colour cosmetics business, which included brands such as CoverGirl, Rimmel, Sally Hansen and Max Factor.
The review also considered its Brazil business, which encompassed local Brazilian brands generating close to $400m in revenue.
