Coty agrees to sell a roughly 9% stake in Wella to KKR for convertible preferred shares valued at $426.5 mln

Coty Inc. shares jumped 2.3% in premarket trade Friday, after the company announced a definitive agreement to sell a roughly 9% stake in beauty and hair care company Wella to private-equity firm KKR & Co. for the redemption of half of KKR's remaining convertible preferred shares in Coty. The deal will reduce Coty's shareholding in Wella to about 30.6% and reflects a 50% gain in Wella's value since Coty closed the sale of 60% of the company to KKR in December of 2020, Coty said in a statement. The preferred shares and accrued dividends are equal to about 47 million common shares, or $426.5 million. Once the deal closes, KKR will own about 45 million Coty Class A shares, equal to a 5.2% stake. The deal will simplify Coty's capital structure and lead to annual dividend cash savings of about $26 million, or $52 million when combined with KKR's secondary share offering that closed in September. "The implied value of Coty's remaining approximate 30.6% stake in Wella is approximately $1.38 billion, compared to the $1.26 billion book value of its 40% stake as of June 30, 2021," said Coty. The deal is expected to close in Coty's fiscal second quarter. Shares have gained 12% in the year to date, while the S&P 500 has gained 14.7%. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

Coty agrees to sell a roughly 9% stake in Wella to KKR for convertible preferred shares valued at $426.5 mln
Coty Inc. shares jumped 2.3% in premarket trade Friday, after the company announced a definitive agreement to sell a roughly 9% stake in beauty and hair care company Wella to private-equity firm KKR & Co. for the redemption of half of KKR's remaining convertible preferred shares in Coty. The deal will reduce Coty's shareholding in Wella to about 30.6% and reflects a 50% gain in Wella's value since Coty closed the sale of 60% of the company to KKR in December of 2020, Coty said in a statement. The preferred shares and accrued dividends are equal to about 47 million common shares, or $426.5 million. Once the deal closes, KKR will own about 45 million Coty Class A shares, equal to a 5.2% stake. The deal will simplify Coty's capital structure and lead to annual dividend cash savings of about $26 million, or $52 million when combined with KKR's secondary share offering that closed in September. "The implied value of Coty's remaining approximate 30.6% stake in Wella is approximately $1.38 billion, compared to the $1.26 billion book value of its 40% stake as of June 30, 2021," said Coty. The deal is expected to close in Coty's fiscal second quarter. Shares have gained 12% in the year to date, while the S&P 500 has gained 14.7%. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.