JAB plans to acquire 20% additional stake in Coty for $1.75bn

JAB has submitted an offer to acquire a 20% stake in American cosmetic firm Coty in a transaction valued at approximately $1.75bn.

The offer will see JAB purchase up to 150 million Coty shares at $11.65 per share in cash. The proposed acquisition will enable JAB to increase its total stake in the business from 40% to 60%.

The offer represents a premium of nearly 21%, based on the stock’s closing price on 11 February.

In order to evaluate JAB’s offer, Coty has set up a special committee comprising three independent directors.

In a statement, Coty said: “The special committee will thoroughly review and evaluate the tender offer to determine a course of action it believes is in the best interest of the company’s stockholders.

“The board will not move forward with approving or recommending the tender offer or any other transaction with JAB Group unless it is approved by the special committee.”

The special committee will inform the board of whether it recommends stockholders accept or reject the tender offer, or whether it expresses no opinion and remains neutral.

The special committee is expected to give its recommendation within ten business days.

JAB also manages Krispy Kreme, Dr Pepper and Peet’s Coffee. It has held a stake in Coty since 1992, which it purchased from Pfizer.

In 2016, Coty acquired 40 brands from Procter & Gamble (P&G) for around $12bn. Following the deal, Coty’s sales slumped and its share prices reduced by around 60% last year.

The company also faced a number of other issues such as supply chain problems ranging from hurricanes to trucker strikes.

JAB believes that it will be able to steer Coty under the leadership of newly appointed CEO Pierre Laubies.

JAB chairman Peter Harf told the Financial Times that the tender offer was a sign of the faith he and his partner Olivier Goudet have in Coty. He said: “We decided to do it because we believe Coty is a good investment and a good company that will prosper long-term.”