German conglomerate JAB Holding Co laid out plans on Tuesday to increase its stake in Coty Inc to 60%, offering to buy out some of the cosmetics maker's minority shareholders after a 50% slump in its value in the past year.
JAB, already the largest shareholder in the beauty products company with a 40% stake, said it would launch a partial tender offer to buy 150 million shares for $11.65 per share in cash, just months after Coty appointed a chief executive and chairman who were associated with JAB.
The offer represents a premium of 20.6%, based on the stock's closing price on Monday, pulling shares around 18% higher to $11.40 in trading before the opening bell.
Supply Chain Issues
Taking a majority stake would give JAB more control over a company that has been grappling with supply chain issues ranging from hurricanes and trucker strikes to problems with integrating brands it bought from Procter & Gamble three years ago.
"We understand that not all investors may share our long-term approach and we expect that shareholders will value the opportunity to obtain a significant premium for their shares," JAB said in the letter.
The private holding company of Germany's Reimann family has built a coffee empire over the past five years, seeking to beat market leader Nestle by buying packaged brands like JDE and coffee house chains like Peet's Coffee.
Coty is one of its few remaining investments outside the coffee and hospitality industry.
JAB, which is doing the deal through JAB Cosmetics B.V., said if all of the 150 million shares were purchased, the company would own about 60% of Coty.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
