admin According to the latest move by major beauty company Coty Inc. contracted to pay $600 million in cash for a majority stake in Kylie Jenner’s cosmetics line to acquire trendy brands that appeal to a younger clientele.
The makeup and fragrance giant said on Monday that it will have overall responsibility for the portfolio whereas part of the Kardashian clan, Jenner, will lead creative efforts and communications. The deal values Kylie Cosmetics, which Jenner has started in 2015 as a line of lip kits when she was still a teenager, at about $1.2 billion.
On Monday Coty shares rose as much as 4.9% to $12.49 in New York where as it had already soared 82% this year through Friday.
To turn its business around Coty has been under pressure and taken a $965 million writedown this year on brands it bought from Procter & Gamble in 2015. The company said in the statement that it’s in the first stages of a plan where its seeking a sale of its professional hair and nail brands, such as Clairol, OPI, and Wella. The Kylie deal is a “key milestone” in Coty’s transformation.
Wells Fargo analyst Joe Lachky said “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”. He rates Coty market perform and has a $13 price target on the shares.
The deal strengthens the status of Jenner as one of the youngest billionaires in the world, according to the Bloomberg Billionaires Index, capitalizing off her family’s fame from the reality series “Keeping Up With the Kardashians.” Jenner’s line of lip kits paired a liquid lipstick with pencil lip liner. Now the business sells everything from eyebrow gel to skin care like face scrubs and sunscreen oil. First sold only online, her products became permanently available in stores nationwide in late 2018 through beauty retailer Ulta, which has more than 1,100 shops across the U.S.
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