The International Cosmetics Market on the verge of a mutation as KKR is preparing an $8bn bid for the acquisition of Coty’s Professional Beauty brands.
KKR is currently working with JPMorgan Chase to prepare an offer to buy the conglomerate’s professional beauty division; this includes: Clairol, GHD, Wella, Nioxin, Sassoon Professional, Professional Sebastian, System Professional, Kadus Professional, Londa Professional, and also the nail care brand Opi. According to Sky News, KKR, the US private equity firm, is working on a ‘takeover bid’ of US$8bn.
The aforementioned brands already changed ownership in 2015, when Coty put forward a bid for the business when it belonged to P&G, finally acquiring them as part of a deal that saw 43 beauty brands change hands. At the time, many commentators suggested that Coty bit off more than it could chew when it completed the purchase of $12 billion for the Procter & Gamble brands.
Now the panorama has changed yet again: Coty plans to sell its Professional Beauty business this year, a decision that has the support of majority shareholder JAB Holdings. As early as October 2019, Coty had mandated Credit Suisse to explore sales options or other strategic alternatives pertaining to the potential sale. The decision to disinvest in this division, as well as in the activities of the branch in Brazil, is part of the re-organization plan of the American multinational, which has the objective of concentrating its activities exclusively on the fragrance, cosmetics and skincare sectors.
By the management team and Board reaching the conclusion that the future growth opportunities of the business “lie increasingly outside the company’s core strategic focus”, the involvement of the private-equity giant KKR subsequently came into play. In November 2019, KKR formally approached Walgreens Botos Alliance — a giant drug-store chain— with a buying proposal, however, no offers have as yet been accepted.
Consequently, still having capitals to invest, KKR is now focusing its attention at Coty, which seems likely to accept an offer to sell its Professional Beauty stable.
