Coty Inc., one of the world’s largest beauty companies with a portfolio of iconic brands across fragrance, colour cosmetics and skin and body care, has announced it has entered into a binding letter of intent to sell a portion of its Wella stake to investment firm IGF Wealth Management.
Coty will sell a 3.6% stake in Wella for $150 million (€134.8m), subject to the completion of due diligence, reflecting a 4% premium to the book value of Wella as of March 31, 2023.
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 (€808.9m).
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 monetisation 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 (€808.9m).
"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 (€359.5m) 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.”
Coty to sell $150m of its retained Wella stake
