Coty to Sell Wella Company Stake for $150M to Pay off Debt

For Coty, the move will accelerate its goal of deleveraging.

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Today(July 18), Coty proposed to sell a 3.6% stake in Wella Company for $150 million.

After the divestment, Coty's stake in Wella will drop to 22.3 percent, valued at $900 million. The transaction is expected to be completed within two months, and the cash proceeds from the divestment will be used to pay down debt.

For Coty, the move will accelerate its goal of deleveraging.

Laurent Mercier, Coty's chief financial officer, said the sale of a portion of Wella will increase the company's asset reserves. By 2025, Coty will divest all of its holdings in Wella and achieve a leverage ratio of two times by the end of 2025.

Publicly available information shows that the professional hair brand Wella was founded in 1880 by German hairdresser Franz Strher and sells shampoo, conditioner and coloring products to individuals and hairdressers.

In 2003, Procter & Gamble acquired 77.6% of the Wella brand for $3.4 billion.

In 2015, Coty Group acquired 43 brands under P&G, including Wella, for $12.5 billion.

In June 2020, private equity giant KKR acquired a controlling stake in Coty's professional beauty and hair brands business for $4.3 billion and merged the businesses, including the professional hair brands Wella, Clairol, hair tools brand ghd, and the professional nails brand OPI into the independently operated company Wella Company. KKR owns 60% of the company, while Coty Group holds the remaining 40%.

(Credit: the Wella Company website)

In October 2021, Coty sold approximately 9% of its shares to KKR in a deal valued at $426.5 million.