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Coty Briefs Investors on the Status of P&G Brands Merger

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Largest beauty and personal care transaction in years

In July 2015, Coty (COTY) announced it was merging with 43 of Procter & Gamble’s (PG) beauty (VDC) (XLP) (FXG) brands for an announced bid of $12.5 billion. The P&G deal is the largest in the beauty and personal care industry in several years.

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Coty to more than double in size

P&G’s 43 brands clocked sales of $5.9 billion in fiscal 2014. The deal will gain Coty valuable scale, more than doubling its turnover, based on pro forma figures. It would also make it the largest player in the fragrances business, ahead of L’Oréal (LRLCY) and LVMH Moët Hennessy Louis Vuitton (LVMUY).

It would also become the third-largest company worldwide in the color cosmetics and beauty products businesses, after L’Oréal and Estée Lauder (EL).

You can read more about the strategic and financial benefits of the deal for both P&G and Coty in our earlier series Coty Buys 43 Procter & Gamble Brands: What Investors Should Know.

Transaction updates

At its 1Q16 earnings release, Coty provided the investor community with an update on its proposed merger with 43 of Procter & Gamble’s beauty brands:

  • Coty and P&G have finalized the financing structure for the transaction.
  • Coty’s executive vice president and chief financial officer Patrice de Talhouët mentioned that an affiliate of P&G’s received loan commitments from lenders for ~$4.5 billion.
  • Coty also received approval from ten of the 12 licensors to transfer their brand licenses upon completion of the transaction and requisite regulatory approvals.
  • The companies expect the deal to close in the latter half of the 2016 calendar year.

P&G makes up ~1.4% of the portfolio holdings in the SPDR S&P Dividend ETF (SDY).

Coty also announced another major acquisition earlier this month. Read about it in the next article.

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