SECTOR DEALS OF THE WEEK: We Now Have a New No. 3 — Coty

Industry Blog

First announced in July 2015, Coty has finally completed the acquisition of 41 beauty brands from Procter & Gamble.  The acquisition spans the fragrance, color cosmetics, salon professional and hair color and styling categories and includes key brands such as Cover Girl, Max Factor, Wella, Sebastian, Clairol Professional, Nioxin and Hugo Boss and Gucci fragrances.  On a combined basis, Coty will generate approximately $9 billion in revenue, will become the third largest beauty care company in the world, and will hold the number one position in fragrances, the number two position in salon hair and number three position in color cosmetics.  With the completion of the transaction, Coty will be organized in three divisions, Coty Consumer Beauty (color cosmetics, retail hair coloring and styling products, body care and mass fragrances), Coty Luxury (prestige fragrances and skincare) and Coty Professional Beauty (salon hair and nail care).

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So what does this mean for beauty care M&A?  In the short term, Coty is likely to be more of a seller than an acquirer as it right-sizes its new brand portfolio and looks to divest some of its smaller, lower end fragrance brands.  Over the long term, the deal positions Coty to be an active acquirer of beauty care brands across its three divisions and provides the market another strategic acquirer alongside the likes of L’Oréal, Estee Lauder and Unilever.  It may also mean the reemergence of P&G as a strategic acquirer as P&G now looks to grow its remaining but still substantial beauty and personal care portfolio.