Coty explores sale of professional beauty unit
The cosmetics company has felt pressure to make a change after $3bn writedown of some mass-market brands
London — Coty, under pressure to turn its business around, is considering a sale of its professional hair and nail products unit that includes the brands Wella, Clairol and OPI. The shares surged the most in more than five months.
Coty has been formulating a comeback plan after a difficult few years. In July, CEO Pierre Laubies laid out the first steps of a turnaround plan intended to revive margins, reduce leverage and better keep up with its rivals. He said at the time some brands could be on the chopping block.
Proceeds from any potential transaction will be used to pay down debt and return excess cash directly to shareholders. JAB Holding, the company’s biggest shareholder, said in the statement that it supports the move.
Shares of Coty climbed as much as 13% to $11.46 in New York, the biggest intraday gain since May. While they had already climbed 54% in 2019 through Friday’s close, they are well below their high of more than $32 in mid-2015.
Meanwhile, rival cosmetics companies have been rapidly acquiring hot new brands as they search for the next big hit, often picking labels that attract younger, trendier shoppers. In July, it said it will take a separate $3bn writedown as its ageing mass-market brands face new competition.Read more: Business Day
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