Coty to close deal with P&G by October

US-based beauty company Coty is expecting to complete the acquisition of Procter & Gamble Company’s (P&G) fragrance, colour cosmetics and hair colour business, P&G Beauty Brands, in October.

In July last year, Coty had entered a definitive agreement to acquire P&G Beauty Brands.

Once completed, the merged entity is expected to generate pro forma combined annual revenues of more than $9bn based on fiscal 2015 performance, strengthening Coty’s leadership position in the global beauty industry.

P&G Beauty Brands includes several fragrance brands such as Hugo Boss and Gucci as well as colour cosmetics brands Covergirl and Max Factor.

With the acquisition, Coty will also be able to own P&G’s hair colour business, which includes Wella and Clairol brand.

In addition, the deal is expected to increase estimated cost savings to around $780m annually, or 16% of acquired revenues, after the next four years, which is a substantial increase from the estimate provided in July 2015.

The combined business is also estimated to increase Coty’s fiscal 2015 adjusted earnings per share, excluding the impact of amortisation, by around $0.49 to $0.54.

In order to realise the cost synergies and end the deal, the combined company is expecting to incur one-off costs of around $1.2bn over the next four years.

Upon completion of the deal, the company’s annual dividend is expected to increase to $0.50 per share.

Coty chairman and interim CEO Bart Becht said: "We continue to make strong progress on the P&G transaction which we expect will make Coty a global leader and challenger in the beauty industry.

"We now expect the transaction to close in October 2016.

"We’ve also substantially increased our estimates for cost synergies compared to when we announced the transaction, significantly improving the outlook for Coty’s adjusted operating margin and adjusted earnings per share, excluding amortisation."