The American group Coty is withdrawing completely from hair care brand Wella. With the sale of the remaining quarter to investor KKR, the group is completing a process that began five years ago.
Shrinking portfolio
Five years ago, Coty largely spun off Wella in order to sharpen its focus and reduce its debt burden. However, it took until now for the beauty group to sell its last remaining stake (25.4%). KKR is paying US$750 million (around €640 million), but Coty retains a contingent right: if KKR later achieves a predetermined return, the American group will receive an additional 45% of the proceeds from a future sale or IPO.
Coty has been facing headwinds for quite some time. Strong competition, heavy debt, and a weak stock price are forcing the company to take action. In recent years, management has therefore opted to simplify its broad brand portfolio. The main question now is which parts will follow: in September, the Financial Times business newspaper reported that Coty is considering divesting the cosmetics division it bought from Procter & Gamble in 2015, which includes well-known brands such as Max Factor and Rimmel.
