Coty to sell 3.6% stake in Wella
The beauty company is selling a 3.6% stake for £114 million ($150 million), subject to the completion of due diligence, reflecting a 4% premium to the book value of Wella as of 31 March 2023.
As a result, Coty will retain a 22.3% stake in Wella with an implied valuation of approximately £697 million ($900 million). The transaction is expected to close in the next two months.
Laurent Mercier, CFO at Coty, said: "Today’s announcement is a milestone for Coty, as the partial monetisation 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.
"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.”
Earlier this month, Coty increased its guidance for the fourth quarter and full-year as it remains "well positioned" to capitalise on continued growth across most categories and markets.
The group expects fourth quarter revenue to increase between 12-15% on a like-for-like basis, up from its previous outlook of 10% growth. This reflects "strong" momentum in the prestige division and recovery in China.