On Friday, beauty giant Coty stated it has sold its residual 25.8% stake in haircare brand Wella to US investment firm KKR for $750 million. Coty has retained the rights to a share of any future sale of the brand, or any revenue accruing from an IPO.
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Coty said it is entitled to a 45% share of any proceeds from a sale of or IPO for Wella, once KKR’s preferred return has been achieved, adding that it plans to use most of the initial liquidity to reduce its debt.
The Wella sale brings to fruition a plan Coty initiated in 2020, aimed at streamlining its portfolio and operations, and at maximising the value it can generate from the Wella business, Coty added.
Earlier this year, Coty embarked on a strategic review of its beauty business which could lead to the sale of brands such as Rimmel and CoverGirl. The group’s goal is to refocus on the fragrance segment in the face of persistently weak demand for colour cosmetics.
This year, Coty’s shares lost almost half of their value.
Coty was founded in 1904 in Paris, and is the fragrance licensee for labels like Gucci, Chloé and Burberry. According to LSEG data, the group’s market capitalisation is approximately $2.8 billion.
