Coty professional beauty sale hits snag; KKR and Henkel hold off on bids to assess COVID-19 impact on salon brands

Coty professional beauty sale hits snag; KKR and Henkel hold off on bids to assess COVID-19 impact on salon brands

THE WHAT? Henkel and U.S. buyout fund KKR are said to be holding off on bids for Coty’s Professional Beauty division as they look to assess the damage caused by the coronavirus pandemic on brands such as Wella, Clairol, GHD and OPI, according to a report by Reuters. 

THE DETAILS According to sources that requested to remain anonymous, the prospective buyers are said to be reluctant to commit to the sale until the full impact of the COVID-19 fall out is available, with hair salons and nail bars being shuttered amidst the pandemic. 

While Coty, Henkel and KKR have declined to comment, the bidders are said to be updating their due diligence ahead of the sale due to outdated pre-coronavirus revenue estimates. 

With the sale previously thought to have been wrapped up by this summer, acquiring finance for the deal is also becoming difficult. 

Coty is expected to lose money on the sale should it refuse the extra time requested. 

THE WHY? Coty’s pre-coronavirus valuation of $7 billion is likely to fall as consumers head online for at-home products as professional salons remain closed, with bidders Henkel and KKR looking for a more transparent and timely valuation of the division before tying up the sale. 

According to Reuters, CEO Pierre Laubies will be forced to reassess his plan to cut debt in a bid to avoid a fire sale. 

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