The proposed transaction will see IGF Wealth Management buy 3.6% of Wella from Coty as the beauty giant looks to fully divest the hair care player by calendar year 2025
Coty has struck a deal with investment firm IGF Wealth Management to sell 3.6% of its retained Wella stake.
Once the US$150m portion is sold, Coty will retain a 22.3% stake in the hair care company, valued at around $900m, which it intends to fully divest by calendar year 2025.
“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 two years and our remaining Wella stake carrying an implied valuation of approximately $900m,” said Coty’s CFO, Laurent Mercier.
Coty sold a 60% stake of its Professional Beauty and Retail Hair businesses to KKR, a private equity firm, in 2020.
Renamed Wella Company and under the leadership of CEO Annie Young-Scrivner, the new company's portfolio included Wella Professionals, Clairol, OPI, Nioxin, Sebastian Professional and ghd.
The purchase of hair care brand Briogeo, last year, marked Wella Company’s first acquisition as an entity independent of Coty.
In October 2021, Coty sold a 9% stake in Wella to KKR in exchange for half of KKR’s preferred shares in Coty, in a move reflecting a 50% appreciation in Wella’s value following the close of the deal in December 2020.
Combined with a KKR secondary share offering which closed in September 2021, the deal scooped Coty $52m in annual cash savings.
Coty said cash proceeds of this new proposed transaction will be used to pay down debt.
“Coupling this deleveraging with a best-in-class medium term growth algorithm, an active capital return programme, including $400m 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,” Mercier added.
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