Coty said Tuesday that it expects to sell a 3.6 percent stake in the professional hair care brand to investment firm IGF Wealth Management, with the cash proceeds to be used to pay down debt.
Coty reiterated its commitment to divest its remaining 22.3 percent stake in Wella by 2025. The group said that the $150 million reflects a 4 percent premium to the book value of Wella as of March 31.
The deal is expected to close in the next two months.
“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 two years and our remaining Wella stake carrying an implied valuation of approximately $900 million,” Laurent Mercier, chief financial officer of Coty, said in a statement.
“The expected transaction is a concrete step in our commitment to both fully divest our retained Wella stake and reach leverage of approximately two times by end of CY25,” he said. “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.”
Coty sold its professional division, including Wella, OPI and Clairol, to KKR on Nov. 30, 2020. The $2.5 billion transaction gave the private equity firm 60 percent control over a joint venture. Coty then owned the other 40 percent, which at the time was valued at $1.3 billion.
The group planned to use $2 billion to pay down debt, with the rest earmarked for general corporate purposes.
The sale of the professional division was part of Coty’s plan to focus on its other business segments.
Then in October 2021, Coty said it was selling about 9 percent of its stake in Wella to KKR in exchange for almost half of the U.S. cosmetics group’s shares that the private equity firm owned in a transaction valued at approximately $426.5 million.
The move decreased Coty’s share in Wella to about 30.6 percent, which was then valued at about $1.38 billion.
As Coty continues to deleverage, it is considering a dual listing in Paris, as well as New York, as previously reported.