Coty has agreed to sell a 9% stake in its professional haircare brand Wella to KKR in exchange for the redemption of half of KKR\u2019s remaining convertible preferred shares in Coty.<\/p>\n
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The transaction, which will reduce Coty's total shareholding in Wella to approximately 30.6%, reflected a 50% appreciation in Wella\u2019s value since the closing of Coty\u2019s 60% sale of Wella to KKR in December 2020 - an event which also coincided with the re-opening of global hair salons and positive momentum in the Wella business, Coty said.<\/p>\n
As consideration for KKR\u2019s purchase of shares in Wella from Coty, Coty will redeem approximately half of KKR\u2019s outstanding convertible preferred shares and accrued dividends - or the equivalent of approximately 47 million shares of the company\u2019s common stock, for approximately 9% of Wella held by Coty in a transaction valued at approximately $426.5 million.<\/p>\n
Upon completion of the transaction, KKR will reduce its ownership to the equivalent of about 45 million Coty Class A shares, representing an approximate 5.2% stake in Coty.<\/strong><\/p>\n The transaction will \u201csimplify Coty\u2019s capital structure\u201d and result in an additional $26 million in annual dividend cash savings, totaling $52 million in annual cash savings when combined with the KKR secondary share offering that closed in September, Coty added.<\/p>\n The deal will also lead to a reduction in Coty\u2019s diluted share count. The implied value of Coty\u2019s remaining approximate 30.6% stake in Wella is approximately $1.38 billion, compared to the $1.26 billion book value of its 40% stake as of June 30, 2021.<\/p>\n Coty\u2019s Chief Executive Officer Sue Y Nabi said: \u201cOur strategy for unlocking value expansion in Coty has remained consistent, anchored on three key objectives: accelerating our sales and profit growth, deleveraging our balance sheet, and simplifying our capital structure.<\/p>\n \u201cToday\u2019s announcement is a great step in advancing our balance sheet and capital structure objectives. With freed funds to drive growth and deleveraging, it is another milestone in transforming Coty into a beauty powerhouse.\u201d<\/strong><\/p>\n \u201cThe value of Wella has increased significantly since we undertook our partial divestment in 2020 and KKR became our strategic partner in the Wella business.<\/p>\n Coty Chief Financial Officer Laurent Mercier added: \u201cToday\u2019s announcement is a testament of our initial investment strategy of capitalizing on the expected increase in Wella\u2019s value over time to further our dual agenda of deleveraging and simplifying Coty\u2019s capital structure, with the added benefits of improving our cash flow and driving EPS accretion.<\/p>\n \u201cOur remaining stake in Wella remains a key financial asset for Coty, which we expect to bring further value over time.\u201d<\/p>\n The transaction is expected to close in the second quarter of Coty\u2019s FY22.<\/p>\n","protected":false},"excerpt":{"rendered":"