Coty Surges as JAB Partial Tender Offer Wins Praise From Street


(Bloomberg) -- Coty Inc. jumped 17 percent in pre-market trading as analysts applauded a proposed partial tender offer from JAB and said it’s positive for investors, at least in the short term.

  • Consumer Edge Research analyst Jonathan Feeney raised his price target on Coty to a Street-high $14 from $10, saying he expects the board to approve the deal and for the entire tender to be completed; he rates the shares outperform
  • The partial tender sets a de facto floor on the stock and gives JAB more control to allow for bolder moves to reduce costs, Feeney said; he also sees the move showing insiders are confident in management’s plans
  • Bloomberg Intelligence analyst Deborah Aitken said JAB has been an investor in Coty for almost 30 years and this move “steadies nerves for investors who wish to stay in what will be a long-term turnaround story”
  • Jefferies analyst Stephanie Wissink views the announcement as “a clear commitment by JAB, symbolic in that it positions JAB in a controlling role, and a bit of a peace offering given the stock’s ~70% pullback in 2018”
  • JPMorgan analyst Andrea Teixeira expects a near-term rally in Coty shares but cautions that “JAB’s increased stake is not a guarantee that COTY’s performance has actually bottomed and will rebound from here”

©2019 Bloomberg L.P.

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