THE WHAT? Coty has announced a strategic partnership with KKR, which will see the global investment firm invest US$750 million through the purchase of convertible preferred shares in Coty. In addition, the duo signed a memorandum of understanding under which, KKR will acquire a majority stake in Coty’s Professional Beauty and Retail Hair Businesses at a contemplated enterprise value of US$4.3 billion.
THE DETAILS Under the terms of the deal, Coty will carve out Wella into a standalone company, in which KKR will acquire a 60 percent stake and Coty will retain the remainder.
“We are thrilled to enter into this strategic partnership with KKR, one of the world’s preeminent investment firms with an exemplary track record of value creation,” commented Peter Harf, Founding Partner of JAB and Chairman of Coty. “Their investment and partnership will be instrumental to strengthening Coty’s balance sheet and helping the company to achieve long-term growth in shareholder value.”
Johannes Huth, Partner and Head of KKR EMEA, added, “Coty is a leader in the attractive global beauty market with iconic brands, global presence and scale, and a strong track record of innovation and growth. We are excited to form this partnership to invest in Coty to support it through this period of unprecedented global uncertainty and allow it to emerge as a stronger, more agile business, and to acquire a majority stake in Wella, a market leader with a strong portfolio of brands in the attractive professional hair market where we see significant opportunities to accelerate growth in partnership with its experienced leadership team. We look forward to working towards the establishment of a lasting and value-creating strategic partnership.”
THE WHY? Coty will see immediate improvement to its balance sheet as well as expand its cost reduction program, making the company more competitive in the medium term. With revenue down 23.2 percent in the third quarter of fiscal 2020, Coty certainly needs this deal to complete.