Beauty giant Coty has officially exited its remaining ownership in the hair care brand Wella. On Friday, the company announced the sale of its final 25.8% stake to investment firm KKR for $750 million.
While Coty is transferring its current shares, the deal includes a strategic “upside” clause. Coty remains entitled to 45% of any future proceeds from a potential sale or Initial Public Offering (IPO) of Wella, once KKR reaches a specific preferred return threshold.
Strategic Pivot to Debt Reduction
Coty, the parent company of household names like Rimmel and Max Factor, plans to use the majority of the $750 million windfall to pay down its corporate debt.
This move is part of a broader effort to stabilize its balance sheet following a period of intense financial pressure.
The company’s stock has faced significant volatility, dropping over 70% during the last two years. However, following the announcement of the Wella sale on Friday morning, shares saw a modest recovery, rising approximately 2% in premarket trading.
Refocusing on Fragrance
The sale marks the end of a multi-year portfolio streamlining program initiated in 2020. Coty originally acquired Wella in 2015 as part of a massive $12.5 billion deal with Procter & Gamble.
Recently, the company has shifted its focus away from “mass beauty” and color cosmetics—sectors currently defined by fierce competition from newer, independent brands. Instead, Coty is doubling down on its high-performing luxury fragrance segment, which includes licenses for major fashion houses such as:
- Gucci
- Chloe
- Burberry
Leadership and Structural Changes
This divestiture comes at a time of potential internal transition for the Paris-founded company. Reports suggest that Coty’s controlling shareholder, JAB Holding, is considering a significant leadership shake-up. This overhaul could potentially lead to the departure of both the board chair and the Chief Executive Officer.
By offloading the Wella stake, Coty hopes to simplify its operations and regain investor confidence. With a current market capitalization of roughly $2.8 billion, the company is banking on its heritage in prestige fragrances to drive future growth.
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