Coty Inc. agreed to pay $600 million in cash for a majority stake in Kylie Jenner’s cosmetics line, the latest move by a major beauty company to acquire trendy brands that appeal to a younger clientele.
The makeup and fragrance giant will have overall responsibility for the portfolio, while Jenner, part of the Kardashian clan, will lead creative efforts and communications, the companies said Monday. The deal values Kylie Cosmetics, which Jenner, 22, started in 2015 as a line of lip kits when she was still a teenager, at about $1.2 billion.
The biggest beauty companies have been on an acquisition spree in recent years as they hope to court younger shoppers with upstart brands. Estee Lauder Cos. bought its remaining two-thirds stake in Korean skin-care company Have & Be Co. for around $1.1 billion on Monday and Japan’s Shiseido spent $845 million to buy clean beauty brand Drunk Elephant in October.
Coty shares rose as much as 4.9% to $12.49 in New York Monday. They had already soared 82% this year through Friday.
Coty has been under pressure to turn its business around, having taken a $965 million writedown this year on brands it bought from Procter & Gamble in 2015. It’s in the first stages of a plan where its seeking a sale of its professional hair and nail brands, such as Wella, Clairol and OPI. The Kylie deal is a “key milestone” in Coty’s transformation, the company said in the statement.
“While the financial implications will be somewhat limited, this transaction, along with Coty exploring strategic options for Professional Beauty, shows that management is moving quickly and aggressively to evolve its portfolio to faster growing channels,” Wells Fargo analyst Joe Lachky said in a note. He rates Coty market perform and has a $13 price target on the shares.
The deal solidifies the status of Jenner as one of the youngest billionaires in the world, according to the Bloomberg Billionaires Index, capitalizing off her family’s fame from the reality series “Keeping Up With the Kardashians.”
Jenner’s line of lip kits paired a liquid lipstick with pencil lip liner. Now the business sells everything from eyebrow gel to skin care like face scrubs and sunscreen oil. First sold only online, her products became permanently available in stores nationwide in late 2018 through beauty retailer Ulta, which has more than 1,100 shops across the U.S.
Source: Bloomberg
Can’t stop reading? Read more
Blackstone to take Apartment Income REIT private in $10bn deal
Asset manager Blackstone known as AIR Communities, for $10 billion in cash, including debt, in what analysts see as a bet on easing pressure within the commercial real estate market. Under the deal, Blackstone will pay $39.12 for each share of the real estate...
STG to Acquire Gresham Technologies for £146.7m
Alliance Bidco, a limited company indirectly owned by Symphony Technology Group (STG Partners), a $10bn US private equity firm focused on data, software and analytics, has agreed to an all-cash £146.7m take-private of Gresham Technologies, a UK fintech specialising in...
Compass Group closes second oversubscribed fund with a $408m cap
US private equity firm Compass Group Equity Partners has closed Compass Group Fund III and hit its hard cap of $408m, the firm’s second oversubscribed fundraising in two years. According to a press release, the fund attracted “strong carryover” from investors in the...