Recently, according to report, Coty Inc. has taken another decisive step in its long-running deleveraging strategy, agreeing to sell its remaining 25.8 percent stake in hair care group Wella to private equity firm KKR for an upfront cash consideration of $750 million. Under the terms of the transaction, Coty will also be entitled to 45 percent of any future proceeds from a further sale or an initial public offering of Wella, once KKR’s preferred return has been met.
The net cash proceeds from the deal will be used to reduce Coty’s short- and long-term debt, reinforcing a balance-sheet clean-up that has been underway for five years. Coty said it sees strong potential for additional cash inflows from the contingent component of the transaction, which could bring total proceeds closer to the carrying value of its investment in Wella. Combined with free cash flow generation of more than $350 million in the first half of fiscal 2025–2026, the divestment is expected to lower Coty’s net leverage to around three times by the end of calendar year 2025.
“This transaction marks a pivotal milestone for Coty — both in our transformation and our long-running deleveraging commitment,” chief financial officer Laurent Mercier said in a statement. He added that Coty’s partnership with KKR had been “highly value-accretive,” enabling the group to progressively monetize its Wella stake while strengthening its financial foundations and sharpening its strategic focus on core assets.
The sale completes a multi-year exit from Wella that began after Coty sold its professional division — including Wella, OPI and Clairol — to KKR in November 2020 in a $2.5 billion deal that left Coty with a 40 percent minority stake. Since then, Coty has steadily reduced its holding, including a partial sale to KKR in 2021 and a $150 million divestment to IGF Wealth Management in 2023, repeatedly reiterating its intention to fully exit by 2025.
