Coty has found a buyer for its professional beauty business, including hair care and hair dyeing brands Wella and Clairol, ghd hair styling tool and the nail polish brand OPI, which will be grouped together in a new standalone company named "Wella".
Coty acquired the professional beauty and retail hair brands in 2016 from Procter & Gamble. With brands such as Wella Professionals, Nioxin, Professional Sebastian, Londa Professional, Sassoon Professional, Clairol Professional, Wella Color Charm, OPI and ghd, Coty’s Professional Beauty division is the #2 salon professional company globally, after L’Oréal.
Under the terms of the agreement, KKR will acquire a 60 percent stake of the new company and Coty will retain the remaining 40 percent interest. Coty’s mass beauty business in Brazil will remain a fully owned business of Coty.
This operation is part of a strategic partnership between Coty and KKR, by which the American investment fund will invest $750 million in Coty through convertible preferred shares, which will be followed by an additional $250 million dollars, also in convertible preferred shares, when the transaction will be completed. These transactions will result in significant deleveraging of Coty’s balance sheet.
“We are thrilled with this announcement. KKR is one of the world’s preeminent investment firms with an exemplary track record of value creation. As a market leader with one of the strongest portfolios of brands in the professional beauty market, we believe this partnership opens up a new set of opportunities for ‘Wella,’ our people, and our brands,” commented Sylvie Moreau, President of Coty Professional Beauty.
KKR has a long track record of investing in branded consumer businesses, including the beauty sector. Its portfolio includes 109 companies with over US$157 billion in annual revenues and employing more than 637,500 people.
“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,” said Johannes Huth, Partner and Head of KKR EMEA.
The final deal is expected to be signed by the end of May.