Coty IPO raises $1 billion, all eyes on future M&A activity

By Simon Pitman

- Last updated on GMT

Coty IPO raises $1 billion, all eyes on future M&A activity
Coty confirmed that it has raised about $1 billion on behalf of existing shareholders for its initial public offering yesterday, putting the shares on the investment today.

The Reimman family, which still holds a majority stake in the business, sold 57.1 million shares at $17.50 each, after initially offering them at a price range between $16.50 to $18.50 a share.

As off this morning, the shares were listed on the New York Stock Exchange, the first time the company’s shares have ever been listed there, under the name COTY.

Coty exec rings opening bell

Michele Scannavini, Coty CEO, rang the opening, flagged by Coty and NYSE executives, together with fashion designer Vera Wang who licenses a number of fragrances to Coty that bear her name.

In early morning trading the share prices started at $17.38, and dipped just below $17.00 by 10.30am, although experts have said that they expect that the flotation will be popular with investors. 

Although Coty has been growing revenues in double-digit figures in recent years, in the past few quarters Coty’s financial results have softened, mainly on account of its lack of exposure to emerging markets, particularly in the Asia Pacific region, fuelling speculation that the business needs to make major acquisition to ensure future growth.

Big on fragrance, room for further investment in skin care

The company is largely known for its fragrance portfolio, and is currently ranked as the second largest fragrance player in the world, with brands such as adidas, Calvin Klein and Playboy.

It has been expanding into the skin care segment in recent years, but it is in the emerging markets, where skin care sales have been fast expanding that its portfolio is most lacking.

In the skin care market it has a considerable exposure to the mass market, but in contrast its fragrance portfolio is more focused on the prestige market.

Investment likely to focus on emerging markets

Its portfolio structure gives experts good reason to believe that the IPO may add to an already considerable war chest which could be used to invest in a business with considerable exposure in the emerging markets, and particularly in the premium skin care segment.

The company is offering up to 65.7 million Class A shares priced at between $16.50 and $18.50 on the New York Stock Exchange, offered by its biggest stockholders – JAB Holdings, and private equity firms Berkshire Partners and Rhone Capital.

JAB holdings is a consortium of four siblings from the Austria-based Reimann family. They currently have an estimated 82 percent share in the business, but the IPO will see that stake reduced by about 14 percent.

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