CHICAGO — Coty agreed to buy 43 of Procter & Gamble’s beauty brands for about $12.5 billion in a deal that would more than double its sales and transform it into one of the world’s largest cosmetics companies.
The transaction will be conducted as a Reverse Morris Trust, meaning P&G will spin or split off the business, which will then merge with a Coty subsidiary, the companies said in statements Thursday. The arrangement is meant to reduce taxes for the companies’ shareholders.
The acquisition will add Hugo Boss and Gucci to Coty’s fragrances offerings and CoverGirl and Max Factor to its cosmetics portfolio. The deal also brings Coty into the hair-color business with P&G’s Wella and Clairol brands. All told, the combined businesses have annual revenue of more than $10 billion, compared with $4.55 billion for Coty in its most recent fiscal year.
For Cincinnati-based P&G, the sale is part of a plan to reinvigorate growth by divesting slower-selling brands. Chief Executive Officer A.G. Lafley is jettisoning as many as 100 product lines that aren’t central to the company’s household and personal-care focus.
