CoverGirl cosmetics maker Coty has announced that it has agreed to sell a portion of its stake in professional beauty business Wella to investment firm, IGF Wealth Management.
Coty will sell a 3.6% stake in Wella for $150 million (€133 million), subject to the completion of due diligence, reflecting a 4% premium to the book value of Wella as of 31 March 2023.
The transaction, which is expected to close in the next two months subject to certain closing conditions, will see Coty retain a 22.3% stake in Wella with an implied valuation of approximately $900 million (€801.9 million).
In 2021, the company swapped around 9% of its stake in Wella with KKR & Co Inc for some of the cosmetic maker's shares the US buyout firm owns, valuing the deal at $426.5 million.
'Milestone'
The announced transaction advances Coty’s objectives to actively deleverage, including reaching its target of driving leverage towards 3x exiting calendar year 2023.
"Today’s announcement is a milestone for Coty, as the partial monetisation of our Wella stake reinforces the strength of our balance sheet, with no debt maturities in the next two years and our remaining Wella stake carrying an implied valuation of approximately $900 million (€801.9 million)," said Laurent Mercier, chief financial officer of Coty.
Annual Profit Forecast
In May, Coty raised its annual profit forecast for the second time. It raised its 2023 adjusted per-share profit expectations to between 38 cents and 39 cents, from 35 cents to 36 cents earlier.
The company has been increasing prices of its products to deal with commodity and shipping costs.
Third-quarter revenue rose 9% to $1.29 billion (€1.14 billion), with adjusted profit of 19 cents per share.
Founded in Paris in 1904, Coty offers a portfolio of beauty brands across fragrance, cosmetics, and skin and body care. Its products are sold in more than 130 countries and territories.
