07.18.23
Coty Inc., one of the world’s largest beauty companies, has entered into a binding letter of intent to sell a 3.6% stake in Wella, a German hair care company, to investment firm IGF Wealth Management for $150 million.
This news follows a similar agreement between Coty and KKR made in 2021, when Coty Inc. agreed to sell an approximate 9% stake in Wella to KKR in exchange for the redemption of approximately half of KKR’s remaining convertible preferred shares in Coty.
Furthermore, back in 2020, Coty sold a majority stake in its Professional and Retail Hair business—including the Wella, Clairol, OPI and ghd brands—to KKR.
The announced transaction advances the Company’s objectives to actively deleverage, including reaching its target of driving leverage towards 3x exiting CY23.
Laurent Mercier, Chief Financial Officer of Coty, said: "Today’s announcement is a milestone for Coty, as the partial monetization of our Wella stake reinforces the strength of our balance sheet, with no debt maturities in the next 2 years and our remaining Wella stake carrying an implied valuation of approximately $900 million.”
He continued, “The expected transaction is a concrete step in our commitment to both fully divest our retained Wella stake and reach leverage of approximately 2x by end of CY25. Coupling this deleveraging with a best-in-class medium term growth algorithm, an active capital return program, including $400 million in targeted future share buybacks, and the continued momentum in our business, it is clear that we are reinforcing Coty’s position as a beauty powerhouse.”
This news follows a similar agreement between Coty and KKR made in 2021, when Coty Inc. agreed to sell an approximate 9% stake in Wella to KKR in exchange for the redemption of approximately half of KKR’s remaining convertible preferred shares in Coty.
Furthermore, back in 2020, Coty sold a majority stake in its Professional and Retail Hair business—including the Wella, Clairol, OPI and ghd brands—to KKR.
Strengthening Coty’s Balance Sheet
Following this transaction, which is expected to close in the next two months subject to certain closing conditions (including the approval of Kohlberg Kravis Roberts & Co. L.P. (KKR)), Coty will retain a 22.3% stake in Wella with an implied valuation of approximately $900 million.The announced transaction advances the Company’s objectives to actively deleverage, including reaching its target of driving leverage towards 3x exiting CY23.
Laurent Mercier, Chief Financial Officer of Coty, said: "Today’s announcement is a milestone for Coty, as the partial monetization of our Wella stake reinforces the strength of our balance sheet, with no debt maturities in the next 2 years and our remaining Wella stake carrying an implied valuation of approximately $900 million.”
He continued, “The expected transaction is a concrete step in our commitment to both fully divest our retained Wella stake and reach leverage of approximately 2x by end of CY25. Coupling this deleveraging with a best-in-class medium term growth algorithm, an active capital return program, including $400 million in targeted future share buybacks, and the continued momentum in our business, it is clear that we are reinforcing Coty’s position as a beauty powerhouse.”
