Coty Sells 9% of Wella to KKR, Valuing Unit at $4.5 Billion

(Bloomberg) -- Coty Inc. is selling an additional 9% stake in its haircare brand Wella to private equity firm KKR & Co. in a deal valued at $426.5 million.

Coty will redeem about half of KKR’s outstanding convertible preferred shares and accrued dividends as payment, according to a statement Friday that confirmed a Bloomberg News report. After the deal, KKR’s stake in Coty will drop to about 5.2%.

The value of the deal represents a 50% jump since Coty originally sold a controlling stake in Wella to KKR in December. The transaction gives the whole unit an equity valuation of about $4.5 billion, according to people familiar with the matter, who asked not to be identified discussing confidential information.

“Our remaining stake in Wella remains a key financial asset for Coty, which we expect to bring further value over time,” Laurent Mercier, Coty’s chief financial officer, said in the statement.

Shares in Coty rose as much as 8.8% on Friday. The stock was trading at $8.31 at 9:59 a.m. in New York, giving the company a market value of $6.8 billion.

“Coty’s partial exit from professional hair care with the spinoff of Wella to KKR last year is reaping rewards,” wrote Deborah Aitken, a consumer analyst at Bloomberg Intelligence, on Friday. “The deal also helps Coty to further deleverage its bloated balance sheet.”

Hair salons and other beauty businesses have seen an increase in sales this year as economies reopened from pandemic lockdowns. 

Coty reported fourth-quarter revenue that beat estimates in August. The company’s shares have more than doubled since Chief Executive Officer Sue Nabi took over in September 2020.

Wella, based in Geneva, owns brands including Clairol, OPI and Nioxin. It has about 6,000 employees across 100 countries.

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