Cosmetics company Coty has signed an agreement to divest its majority stake in professional beauty and retail hair businesses to investment firm KKR.
As part of this agreement, KKR will acquire the majority of Coty’s professional beauty and retail hair businesses, including the Wella, Clairol, OPI and ghd brands, in a deal expected to value approximately $4.3bn.
The agreement will see KKR acquire a 60% stake and make Wella into a standalone company.
Coty will receive proceeds of $3bn in cash while an additional $1bn investment will be made by KKR. However, Coty will continue to own its beauty business in Brazil.
Coty COO and CFO Pierre-André Terisse said: “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.
“We will see an immediate improvement to our balance sheet and are in the final stages of finalising a 60/40 partnership for our professional beauty and retail hair businesses. In the shadow of a global lockdown, we have also announced a comprehensive plan to reduce fixed costs by $700m, 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.”
AFW LP and Credit Suisse acted as financial advisers to Coty while Skadden, Arps, Slate, Meagher & Flom serve as legal counsel.