US-based beauty retailer Coty has agreed to divest a stake of around 9% in professional and retail hair business Wella to its majority owner KKR.
As part of the agreement, Coty will redeem the equivalent of around 47 million shares of its common stock for $426.5m.
The transaction will reduce Coty’s share in Wella to around 30.6%, which has an implied value of around $1.38bn.
It comes after the company sold a majority stake in Wella, which consists of Wella, Clairol, OPI and ghd brands (Wella), to KKR for around $2.5bn last December.
Coty CEO Sue Nabi said: “Our strategy for unlocking value expansion in Coty has remained consistent, anchored on three key objectives: accelerating our sales and profit growth, deleveraging our balance sheet, and simplifying our capital structure.
“Today’s announcement is a great step in advancing our balance sheet and capital structure objectives.
“With freed funds to drive growth and deleveraging, it is another milestone in transforming Coty into a beauty powerhouse.”
Coty and KKR initially signed an agreement for the deal in May. The transaction is expected to close in the second quarter of the coming fiscal year.
Once it is completed, KKR will reduce its ownership of Coty to around 5.2%.
KKR Partner and Europe, Middle East and Asia (EMEA) operations head Johannes Huth said: “The agreement we have reached with Coty enables each party to recognise the significant value and growth created in each of the two businesses over the past year, while allowing KKR to increase its interest in Wella, which is our focus.
“We continue to see meaningful opportunities to accelerate growth at both Wella and Coty and look forward to our enduring collaboration.”
Coty recently partnered with Perfect Corp to implement technology solutions for its beauty brands’ digital marketing toolkits.
The company will use Perfect Corp’s suite of augmented reality (AR) and artificial intelligence (AI) tools to enhance its customer experience.