Coty Inc.  announced today that it has completed the merger of The Procter & Gamble Company’s fine fragrance, color cosmetics, salon professional and hair color and certain styling businesses (“P&G Specialty Beauty Business”) into Coty.  Coty is now the third-largest beauty company in the world, with approximately $9 billion in revenue.  As a combined company, Coty will also hold the number one position in fragrances, and number two and three positions in salon hair and color cosmetics, respectively.

As previously announced, following the completion of the merger, Camillo Pane became the new Chief Executive Officer of Coty. Commenting, Pane said, “It is my great privilege to take over the reins of leadership at such a transformational moment. Today marks a new chapter in Coty’s rich heritage. With this merger, we have brought together a powerful portfolio of much loved beauty brands and some of the world’s most talented people in beauty and consumer goods. I believe this combination, together with our distinctive entrepreneurial culture, focused and lean operating structure, and efficient earnings model, will enable Coty to be a challenger in the beauty industry. We aim to relentlessly pursue superior products and solutions, build brands that inspire and enable consumers to celebrate and liberate their own individual beauty.”

Bart Becht, Chairman of Coty’s Board of Directors, said, “Coty is now better positioned as we aim to become, over time, a global industry leader by being a clear challenger in beauty, delighting our consumers and creating long term shareholder value. I am confident that we now have a much improved team, structure and culture to make the vision of this merger a reality. I look forward to continuing to work with the new leadership team in my role as Chairman to drive Coty to in-market success and profitable growth.”

Consumer-Centric Organizational Structure, with Iconic Brands

Coty is organized into three divisions: Coty Consumer Beauty, Coty Luxury and Coty Professional Beauty, each focused on their respective categories and channels, with a lean structure that enables faster decision making, focused investments and better communication with customers and consumers.

Coty Consumer Beauty is focused on color cosmetics, retail hair coloring and styling products, body care and mass fragrances, with the intent of providing consumers with innovative products primarily in the mass retail channel.  Its iconic brand portfolio includes Adidas, Bourjois, Clairol, COVERGIRL, David Beckham, Katy Perry, Max Factor, Rimmel, Sally Hansen and Wella.

Coty Luxury is focused on expanding Coty’s leadership position in prestige fragrances and emerging position in skincare, in the Luxury Beauty market across all regions and luxury channels, including travel retail. Its fragrances include such well-known brands as Marc Jacobs, Calvin Klein, Chloé, Gucci, Hugo Boss, Balenciaga, Bottega Veneta, Alexander McQueen, Davidoff and Miu Miu, amongst others, and skincare brands include Lancaster and philosophy.

Coty Professional Beauty is focused on servicing salon owners and professionals in both hair and nail care, covering all key salon segments and salon client needs. The professional-focused brands include Clairol Professional, Nioxin, OPI, Sebastian Professional, System Professional and Wella Professionals.

Financial Benefits of Transaction


Coty aims to achieve a best-in-class profit margin and cash flow conversion model in an industry with attractive growth dynamics and modest private label penetration. Coty expects to achieve total cost savings of approximately $750[1], million or 16%1 of acquired revenues, through the transaction composed of: initial synergies, reflecting P&G costs that will not transfer, of approximately $350 million; and incremental cost synergies, to be recognized over four years, of approximately $400 million, achieved through a range of efficiency opportunities that the combination of the two businesses create.

The merger synergies are expected to enhance Coty’s already strong margins, cash flow generation and earnings power. Including anticipated synergies, Coty expects the P&G Specialty Beauty Business merger to:

  • Add approximately 500 to 600 basis points to Coty’s stand-alone adjusted operating profit margins over a four-year period, resulting in margins of approximately 19.6% which would make Coty a margin leader relative to its Beauty peers.
  • Drive a pro forma increase to Coty’s fiscal year 2016 adjusted earnings per share base of approximately $0.48, including the assumed four year implementation of full run-rate synergies.
  • Generate close to $1 billion in free cash flow by year two.


At the close of the transaction, Coty will assume approximately $1.9 billion of debt of the P&G Specialty Beauty Business.  On a combined basis, the business at close is expected to have moderate pro forma debt leverage of approximately 3.5x net debt / Adjusted EBITDA, providing ample cash flow for the enhanced annual dividend of $0.50 per share, while preserving strategic flexibility.

Outlook for Fiscal 2017

As previously communicated, Coty anticipates that the first half revenue trend will be below prior year results and the results for the combined company, as Coty continues to make strategic choices to build a better business, including rationalizing wholesale distribution, and as resources which normally work on the business have been working on closing the transaction and the future of the combined company. Coty remains committed to return the Coty business back to growth in the second six month period and is targeting to strengthen Coty’s growth rate in the following fiscal years.

Coty Heritage

Coty has a unique and long standing heritage of entrepreneurs, upon which the culture of the new Coty is being modeled. François Coty started his fragrance business more than 100 years ago by making perfume accessible to the general public for the first time and creating the modern fragrance category. Eugene Rimmel brought the world the first non-toxic mascara, Max Factor coined the term “make-up,” Sally Hansen pioneered nail care and Wella was the first professional hairdressing company. All of these entrepreneurs will form the inspiration for the new Coty company to bring new innovative beauty products to consumers and drive shareholder value over time.

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