Coty Files Plans for $700 Million IPO on Selling Stockholders' Behalf
06/29/2012| 04:55pm US/Eastern
--Coty's filing comes after it dropped plans to purchase Avon
--All shares to be sold by current owners
--No date or exchange selected for launch yet
By Victoria Stilwell and Lynn Cowan
Coty Inc. filed plans Friday for an initial public offering to allow the perfume-and-cosmetics maker's current stakeholders to exit some of their holdings.
Coty's IPO plans came about a month after it selected Bank of America Merrill Lynch and J.P. Morgan Chase & Co. as underwriters. The company has considered several strategic options in the past year and recently dropped a $10.7 billion attempt to acquire larger rival Avon Products Inc. (>> Avon Products, Inc.). The Wall Street Journal first reported in April that Coty was considering an IPO as an alternative to the Avon deal.
Coty registered for up to $700 million in its initial filing, but that figure is a placeholder used to calculate registration fees. The actual amount raised in the deal could differ dramatically.
It takes an average of three months from filing to price an IPO, so Coty's deal likely won't be ready until September. The company hasn't selected the exchange on which it wants to list, but wants to trade under the symbol COTY.
Selling stockholders are selling all of the Class A common stock being sold in the offering, so Coty won't receive any proceeds from the IPO. The filing didn't specify who will be selling their shares in the company, which is majority owned by Joh. A. Benckiser GmBH, the investment vehicle of Germany's wealthy Reimann family. Benckiser also owns Labelux Group GmbH, a holding company for luxury goods including Jimmy Choo shoes, and it has a large stake in Reckitt Benckiser Group PLC (RBGPY, RB.LN), a household-products powerhouse that makes Lysol, Mucinex, Woolite, Clearasil and French's mustard, among other brands.
The biggest revenue drive for Coty, which was founded in Paris in 1904, is its fragrance business, followed by cosmetics and skin-and-body care. Its top 10 brands, which it refers to as its "power brands," are expected to generate about 70% of its net revenue in fiscal 2012, and include names such as Calvin Klein, Chloe, Marc Jacobs, OPI nail polish, Playboy, Rimmel cosmetics, Sally Hansen nail-care products, and skin-care brand Philosophy.
Coty makes fragrances under celebrity names, including Jennifer Lopez and David Beckham, and designer labels such as Calvin Klein. In 2010, it acquired nail-polish maker OPI Products and skin-care brand Philosophy.
In the nine months that ended March 31, Coty's June-ended fiscal year-net revenue rose 17% to $3.6 billion, and its net income declined by half to $33 million, compared to the same period a year earlier. More than half the increase in its revenue came from acquisitions, and the remainder came from new-product launches, as well as expanded distribution in areas of Europe, Russia, Australia and China. The company's cost of sales and operating expenses rose partially due to its acquisitions, while its gross margin declined due to a lower-margin product mix.
Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com and Lynn Cowan at email@example.com.