Coty completes merger with P&G beauty business
Coty has completed the merger with P&G’s fine fragrance, color cosmetics, salon professional and hair color and select styling businesses in a deal that makes the American manufacturer the third-largest beauty company in the world with approximately $9 billion in revenue.
The combined business is now also the largest fragrance company in the world and the second-largest in salon hair, as well as third-largest in colour cosmetics.
New CEO of Coty, Camillo Pane commented: “With this merger, we have brought together a powerful portfolio of much loved beauty brands and some of the world’s most talented people in beauty and consumer goods.”
Bart Becht, Chairman of Coty’s Board of Directors, added, “Coty is now better positioned as we aim to become, over time, a global industry leader by being a clear challenger in beauty, delighting our consumers and creating long term shareholder value.”
The deal included well-known makeup brands such as Covergirl, Max Factor, Sally Hansen and Wella, as well as P&G fragrance licenses such as Hugo Boss, Gucci, Lacoste, Bruno Banani, Escada, Mexx, James Bond 007, Gabriela Sabatini, Stella McCartney and Alexander McQueen.
Following the transaction, David S. Taylor, P&G Chairman, President and Chief Executive Officer, commented: “This effectively completes the major work we undertook two years ago to streamline and strengthen our product portfolio. We are now focused on 10 product categories and about 65 brands where P&G has leading market positions and where product technologies deliver performance differences that matter most to consumers.”
Coty will now be organized into three divisions: Coty Consumer Beauty, Coty Luxury and Coty Professional Beauty, each focused on their respective categories and channels.
Coty expects to achieve, through the combination of the companies, cost savings of $750 million, or 16 percent of acquired revenues. The merger synergies are expected to enhance Coty’s already strong margins, cash flow generation and earnings power.
The New York-based business expects the merger to add 500 to 600 basis points to its adjusted operating profit margins over a four-year period, resulting in margins of approximately 19.6%.
As previously announced, Coty will assume about $1.9 billion of debt of the P&G Specialty Beauty Business. The company anticipates that its first half revenue will be below prior year results as it continues to rationalize its wholesale distribution.
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