Key takeaways of Coty’s Wella sale
- Coty has sold its final 25.8% stake in Wella to KKR for $750 million.
- The deal includes 45% of future sale or IPO proceeds after KKR’s return.
- Proceeds will primarily be used to reduce Coty’s short- and long-term debt.
- Coty expects net leverage to fall to ~3x by end of CY25.
Beauty multinational Coty Inc has sold its remaining 25.8% stake in Wella to KKR-managed capital accounts and investment affiliates.
The company said it will receive upfront cash consideration of $750 million and 45% of any proceeds from a further sale or an initial public offering of the business, after KKR’s preferred return has been met. Based on Wella’s strong recent and expected performance, as well as current market valuations, Coty sees strong potential for additional cash proceeds, bringing the total gross proceeds closer to the carrying value of its investment in Wella.
The sale completes the programme initiated in 2020 to simplify Coty’s portfolio and operations, while realising the full value of its Wella business.
Strategic shift: simplifying Coty’s brand portfolio
Coty said it intends to use the majority of Wella upfront cash proceeds related to this transaction, net of tax, to pay down its short-term and long-term debt. Both the Wella proceeds and Coty’s strong free cash flow generation (over $350 million in the first half of FY26, in line with its recent guidance) are expected to reduce Coty’s financial net leverage to approximately 3x by the end of CY25.
Coty acquired Wella from Procter & Gamble in 2015 as part of a $12.5bn deal for a large portion of P&G’s beauty business.
Earlier this year, the group undertook a strategic review and considered selling its mass-market make-up brands to sharpen its focus on perfumes.
Last week, the Financial Times reported that the group’s controlling shareholder, JAB Holding, was planning a leadership overhaul that could result in the exit of both Coty’s board chair and CEO.
