Coty plans to divest professional beauty business and Brazilian operations

Coty, a US beauty conglomerate, has announced plans to divest its professional beauty business and associated hair brands, as well as its Brazilian operations as part of its ongoing transformation.

The potential divestiture is expected to help Coty focus more on its fragrance, cosmetics and skin care businesses.

Aligned with Coty’s previously announced turnaround plan, these strategic initiatives are also said to improve the company’s execution capabilities, better leveraging its assets and delivering significant financial improvements.

Coty will use the proceeds from any potential transaction to pay down debt and return excess cash directly to shareholders.

Pierre Laubies – CEO of Coty said: “After stabilizing our operations in fiscal 2019, we announced in early July a plan to turn around Coty’s performance.

“Today’s announcement accelerates this transformation and will help reposition Coty as a more focused and agile company, deleverage our balance sheet, and improve our ability to invest in areas with the greatest growth potential.

“The Professional Beauty teams have done an incredible job over the past three years in creating a strong business platform, putting us in the favorable position to find the best owner for that business while unlocking significant value for Coty Shareholders and allowing us to further grow our core remaining businesses.”

Coty plans to divest professional beauty business and Brazilian operations. Image by Free-Photos from Pixabay.

The businesses under strategic review are expected to generate approximately US$2.7 billion in net revenues for fiscal year 2019.

Credit Suisse will assist the company with the potential divestiture that is expected to be complete by summer 2020.

Coty’s professional business holds brands including Wella, Clairol, OPI, and ghd while the luxury unit has a portfolio of licenses, including Gucci, Burberry, Hugo Boss and Calvin Klein.

The cosmetics unit brands include Rimmel, Max Factor, Covergirl and Sally Hansen, and skin care business includes brands such as Lancaster and philosophy.