Coty considers divesture of Professional Beauty business

American cosmetics firm Coty is set to explore strategic alternatives including the divestiture of its Professional Beauty business and related hair brands, and the Brazilian operations.

The company’s management and the board of directors have made this decision as part of the ongoing strategic review process.

The cosmetics major aims to focus more on its fragrance, cosmetics and skincare businesses going forward.

Coty is planning to use the proceeds from any potential transaction to pay down debt and return excess cash directly to shareholders.

These strategic initiatives complement the company’s recent turnaround plan to deliver significant financial improvements.

Coty chief executive officer Pierre Laubies said: “After stabilising our operations in fiscal 2019, we announced in early July a plan to turn around Coty’s performance.

“Today’s announcement accelerates this transformation and will help reposition Coty as a more focused and agile company, deleverage our balance sheet, and improve our ability to invest in areas with the greatest growth potential.

“The Professional Beauty teams have done an incredible job over the past three years in creating a strong business platform, putting us in the favourable position to find the best owner for that business while unlocking significant value for Coty shareholders and allowing us to further grow our core remaining businesses.”

Additionally, the beauty firm’s board has selected investment bank and financial services company Credit Suisse to assist with the strategic review and possible divestiture. It expects the process to be completed by summer 2020.

Coty’s luxury portfolio features licences for Gucci, Burberry, Hugo Boss and Calvin Klein brands. Its cosmetics business includes Rimmel, Max Factor, Covergirl and Sally Hansen brands, while its skincare brands include Lancaster and philosophy.

In February this year, JAB submitted an offer to acquire a 20% stake in Coty in a transaction valued at approximately $1.75bn.