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Unilever and Henkel step forward as potential suitors for Coty’s professional beauty brands: Reuters
Posted on Friday, 22 November 2019 09:19
US cosmetics firm Coty is selling its professional beauty business, mainly comprising hair and nail care products, and is in talks with strategic players and private equity investors regarding the disposal, people close to the matter told Reuters.
According to these sources, Unilever and Henkel are among those in the running, while buyout groups Advent, Blackstone, CVC Capital Partners, BC Partners and Cinven are also considering making a bid.
Coty said last month that it has hired Credit Suisse to handle the strategic review of the assets.
A sale is likely to be worth around USD 7.00 billion, the insiders said.
These same people noted that bankers advising the business estimate the portfolio of brands to be valued at between 10.0x and 12.0x core earnings of USD 600.00 million.
Coty’s assets comprise Wella, Clairol, GHD and OPI and are all run as part of group’s professional business with revenues expected to reach USD 2.70 billion this year.
Interestingly, the report by Reuters comes days after the New York-listed company signed a strategic partnership agreement with Keeping up with the Kardashians star Kylie Jenner.
This deal gives Coty 51.0 per cent of Kylie Cosmetics - the brand owned by world’s youngest ever billionaire - in exchange for USD 600.00 million.
In 2016, the group picked up Procter & Gamble’s beauty business for USD 11.17 billion, bringing in makeup brands such as Covergirl and Max Factor.
This deal also increased Coty’s debt load to around USD 7.72 billion at 30th September 2019.
The company is hoping the divestment of its professional beauty business will help to reduce obligations, return cash to shareholders and improve the group’s ability to invest in areas with growth potential.
Shares in Coty closed down slightly to USD 11.85 yesterday, giving the firm a market capitalisation of USD 8.98 billion.
In the first three months of fiscal 2020 ended 30th September 2019, the group posted net income of USD 52.30 million on revenue of USD 1.94 billion.
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