Market Overview

Coty Seeks $700 Million for IPO

Beauty company Coty filed for an initial public offering (IPO) Friday with the aim of raising $700 million.

According to Reuters, Chairman Peter Harf told a German newspaper in May that the company was preparing for an IPO and soon afterwards announced the selection of Bank of America Merrill Lynch and J.P. Morgan Chase as underwriters.

Curiously, the IPO is being considered as an alternative to an attempted $10.7 billion acquisition of rival cosmetics firm Avon Products (NYSE: AVP). Coty made its first bid for Avon in April and subsequently raised the offer on May 10. However, the deal amounted to nothing after Avon missed the deadline that Coty had set.

In May, Benzinga reported that Coty Executive Bart Becht was looking to benefit from AVP's popularity in emerging markets like Brazil. Overall, Avon could more than double Coty's $4.5 billion annual sales.

The most recent offer from Coty amounted to $24.75 per share, up from the previous offer of $23.25. Coty also secured equity backing from Warren Buffett's Berkshire Hathaway (NYSE: BRK). Berkshire would have provided half of the $5 billion in equity from backing company BDT Capital Partners.

There is some controversy clouding the deal though, as Avon and the Securities and Exchange Commission (SEC) are looking into whether some executives bribed foreign officials. Some members of Avon's board do not want to turn over all of the information that Coty is seeking.

Coty has become successful by making perfumes for the likes of Heidi Klum and Beyonce Knowles, and owns brands like Calvin Klein and Davidoff. The company is majority-owned by Joh. A. Benckiser, and competes against the likes of Estée Lauder (NYSE: EL) and L'Oreal.

Reuters said that Coty posted net income of $32.9 million on revenue of $3.58 billion for the nine months ending March 31 and the company is planning to list on Nasdaq or NYSE under "COTY".

Follow me @BCallwood.

Posted-In: Bank of America Bart Brecht BDT Capital PartnersNews Legal Management IPOs Trading Ideas Best of Benzinga

 

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