Coty to sell portion of Wella stake

Coty Inc. announced on Tuesday it has agreed to sell a portion of its haircare brand Wella stake to investment firm, IGF Wealth Management.

The New York-based cosmetics giant ​said it is selling a 3.6% stake in Wella for $150 million, subject to the completion of due diligence, reflecting a 4% premium to the book value of Wella as of March 31. As a result, Coty will retain a 22.3% stake in Wella with an implied valuation of approximately $900 million. 

“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 2 years and our remaining Wella stake carrying an implied valuation of approximately $900 million,” said Laurent Mercier, chief financial officer of Coty.

“The expected transaction is a concrete step in our commitment to both fully divest our retained Wella stake and reach leverage of approximately 2x by end of CY25. 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.”

The news comes almost two years after Coty sold an approximate 9% stake in Wella to KKR in exchange for some of the cosmetic maker’s shares the U.S. buyout firm owns, valuing the deal at $426.5 million.

More recently, Coty in May announced it has raised its annual profit forecast for the second time, with the CoverGirl parent banking on price hikes, new launches and resilient demand for its high-end and affordable fragrances and cosmetics.​