As reported by Reuters, Unilever and Henkel, as well as a number of funds for redemption, including Advent and Cinven, are in talks with Coty to submit applications for participation in the bidding for some of the most popular cosmetic brands in the amount of 7 billion U.S. dollars.
It is expected that the company Coty, whose market value is 9 billion and the controlling stake is owned by German conglomerate JAB Holdings, in December will start the auction to find a new owner for a portfolio of professional brands of hair care and nail, says an anonymous source. A portfolio that included Wella, Clairol, GHD and OPI, is estimated at $ 7 billion and sparked interest among industry participants and financial investors.
Sources said that Colgate-Palmolive is one of the number of consumers who are considering further proposals for expansion of their offices skin care. It is expected that based in new York, the Colgate Palmolive company, recently purchased the unit for skin care French Filorga Laboratoires Cosmétiques for 1.66 billion, will enter the race for the brands Coty, faced with competition from Unilever and Henkel.
In the list of financial backers include Advent, Blackstone, KKR, CVC Capital Partners and BC Partners. One of the sources said that Cinven is considering a possible joint bid for the brands. Partners Coty, Henkel, Colgate-Palmolive, Cinven, Advent, CVC and BC declined to comment.
Coty plans to complete the sale of brands, which was announced last month, by mid-2020 and has hired investment Bank Credit Suisse for discussions with potential bidders. It is expected that the confidential information packages will be sent out in December with the aim of obtaining the optional clauses in the beginning of next year.
Bankers advising potential bidders, suppose that the portfolio can bring in 10-12 times higher underlying profit, about $ 600 million, giving him a rating of 6-7 billion dollars. The share of the professional beauty segment Coty, which sells mainly hair care products for hair and nails, accounting for about 21% of total revenue, and the annual sales is around of 1.81 billion. However, over the last four quarters the company’s sales fell, which caused the Coty decision to reduce its share in this segment of the industry.
Coty also owns other cosmetic brands such as Rimmel and Max Factor, as well as firms and skin care Lancaster and Philosophy, but have fought for years for the integration of such a wide range of products. Sale in 2016 part of the cosmetics business of Procter & Gamble, which included Covergirl and Max Factor, forced the company to take billions of dollars of loan funds and to outline a four-year restructuring plan.
Debt burden at the end of June amounted to 7.7 billion dollars. CEO Coty Pierre Lobi stated that the October sales will improve the company’s ability to invest in the region with significant growth potential, but added that the revenue from any transaction will be used to repay debt and return cash to shareholders.