In a statement issued on Monday, Coty announced that it signed a memorandum of understanding (MOU) with KKR for the sale of a majority stake in its professional beauty and retail hair businesses including the Wella, Clairol, OPI and ghd brands (together, Wella) in a deal valued at $4.3bn.
Under the terms of the MOU, Coty will carve out Wella into a standalone company in which KKR will acquire a 60% stake and Coty will retain the remaining 40% interest. Coty said this transaction would result in $3bn in cash payments flowing back to it.
On signing of the Wella transaction, KKR will also make an incremental convertible preferred investment of $250m in Coty.
"Together with the initial $750m investment, these transactions will result in significant deleveraging of Coty’s balance sheet and position the company for long-term growth and investment in its core portfolio. Coty’s mass beauty business in Brazil will remain a fully owned business of Coty," Coty said.
The cosmetics maker also laid out plans to cut costs by $700m, suspended its dividend and said KKR would invest $1bn in Coty through the sale of convertible preferred shares.
Coty reported a wider-than-expected loss and revenue down 23% for the three months ended March 31, including a 14% fall in its professional beauty division.
