Coty Inc has sealed a deal to buy Procter & Gamble Co`s beauty business, which includes brands such as Clairol and Wella, in a $12.5 billon transaction that will make the perfume maker one of the world`s largest beauty companies.
P&G will separate 43 of its cosmetics, fragrance and haircare brands and fold them into Coty under a "Reverse Morris Trust" transaction that will ultimately give P&G shareholders a majority stake in the new entity.
The combined company is expected to have annual revenue of more than $10 billion - double Coty`s turnover - and will be led by Coty CEO Bart Becht.
JAB Cosmetics B.V., which owns 97 percent of Coty`s Class B shares, is in favor of the deal, Coty said. JAB is a unit of Joh. A. Benckiser, the investment vehicle of Germany`s billionaire Reimann family.
Coty said the deal valued the P&G Beauty Business at $12.5 billion at the time of the proposal, based on the number of Coty basic shares outstanding and an average Coty trading price.
Based on Coty`s current stock price and outstanding shares and equity grants, the value of the transaction is about $15 billion, P&G said.
Goldman Sachs advised P&G, while Morgan Stanley, Barclays, JP Morgan and BofA Merrill advised Coty. Morgan Stanley was the lead adviser for Coty.
P&G`s shares opened up 1 percent at $81.83, while Coty was up 1.3 percent at $31.94 on Thursday.
