Coty Inc will acquire 43 of Procter & Gamble’s beauty brands in a complicated transaction P&G valued at some $12.5 billion. Coty slid 1.9 percent to $31.52 Wednesday.
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The deal will be structured as a “Reverse Morris Trust”, a maneuver that combines a spin-off followed by a merger meant to minimize taxes.
The deal is for P&G’s global salon professional hair care and colour, retail hair colour, cosmetics and fine fragrance businesses, along with select hair styling brands.
Following P&G, the world’s biggest advertiser, announcing that it was to clear out 100 non-core brands earlier this year, Coty issued a merger offer which could bolster P&G’s coffers by a real-world total of $5.9bn. The consumer products company has been working to slim down and focus on a portfolio of just 65 brands it believes will drive growth.
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The acquisition meets Coty’s goal of adding a wider range of products to its fragrance and cosmetics offerings. Coty anticipates about $550 million in cost savings on an annual basis over the next three years and approximately $500 million in one-time costs. It is expected to close in the second half of 2016.
