NEW YORK (BLOOMBERG) – Coty Inc agreed to pay US$600 million (S$816 million) in cash for a majority stake in Kylie Jenner's cosmetics line, the latest move by a major beauty company to acquire trendy brands that appeal to a younger clientele.
The makeup and fragrance giant will have overall responsibility for the portfolio, while Jenner, part of the Kardashian clan, will lead creative efforts and communications, the companies said Monday (Nov 18).
The deal values Kylie Cosmetics, which Jenner, 22, started in 2015 as a line of lip kits when she was still a teenager, at about US$1.2 billion.
The biggest beauty companies have been on an acquisition spree in recent years as they hope to court younger shoppers with upstart brands.
Estee Lauder Cosmetics bought its remaining two-thirds stake in Korean skin-care company Have & Be Co for around US$1.1 billion on Monday and Japan's Shiseido spent US$845 million to buy clean beauty brand Drunk Elephant in October.
Coty shares rose as much as 4.9% to $12.49 in New York Monday. They had already soared 82% this year through Friday.
Coty has been under pressure to turn its business around, having taken a $965 million writedown this year on brands it bought from Procter & Gamble in 2015.
It's in the first stages of a plan where its seeking a sale of its professional hair and nail brands, such as Wella, Clairol and OPI.
The Kylie deal is a "key milestone" in Coty's transformation, the company said in the statement.
"While the financial implications will be somewhat limited, this transaction, along with Coty exploring strategic options for Professional Beauty, shows that management is moving quickly and aggressively to evolve its portfolio to faster growing channels," Wells Fargo analyst Joe Lachky said in a note.
He rates Coty market perform Read More – Source
