Cosmetics group Coty has won a series of auctions organized by Procter & Gamble for 43 beauty products including Wella, Max Factor and CoverGirl. The US group, already famous for the distribution of perfumes such as Calvin Klein and Marc Jacobs, thus enters the Olympus of beauty becoming the second giant in the world after the French L'Oréal.
P&G has accepted the 12,5 billion dollar offer from the Coty group, the deal is tax free thanks to an operation known in M&A as the "Reverse Morris Trust". This is an increasingly popular operation among US companies that want to lighten up without paying taxes on the sales of products or brands. In practice, instead of the traditional sale operation, P&G makes a spin-off by giving its shareholders 52% of the new entity created with Coty. In doing so, the transaction is tax free. The exact structure of the agreement signed between P&G and Coty has yet to be defined but P&G expects a one-time capital gain of $5-7 billion at the end of the transaction.
"It is rare to see such important brands arrive on the market," commented a banker to the New York Post who was the first to break the news of the transaction between P&G and Coty. In a statement, P&G claimed the deal would "maximize value for P&G shareholders and minimize annual earnings dilution." AG Lafley, P&G chairman and chief executive officer, said in a statement that "the merger with Coty, a strategic acquirer, will provide an excellent new home for these businesses and brands."
