--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. (AVP). 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 lynn.cowan@dowjones.com.