Dec 19 (Reuters) - Coty has sold its remaining 25.8% stake in hair care brand Wella to KKR for $750 million, while retaining rights to a share of any future sale or initial public offering proceeds, the U.S. cosmetics maker said on Friday.
The owner of the Rimmel and Max Factor brand said it was entitled to 45% of any proceeds from a sale or IPO of the business once KKR's preferred return was met, and that it planned to use most of the upfront cash to reduce its debt.
The company has struggled over
the past couple of years to drive sales in its mass beauty category as it fights heightened competition from newer brands.
The company's shares rose about 2% in premarket trading on Friday. They have cratered over 70% in the last two years.
Earlier this year, Coty launched a strategic review and mulled a sale of the business in an effort to refocus on its fragrances segment amid persistently weak demand for colour cosmetics.
Last week, the Financial Times reported that controlling shareholder, JAB Holding, was planning a leadership overhaul at Coty that could result in the exit of its board chair and CEO.
The company on Friday said that the divestiture completes a programme launched in 2020 to streamline its portfolio and operations. Coty bought Wella from Procter & Gamble in 2015 as part of a $12.5 billion deal for P&G's beauty business.
Founded in 1904 in Paris, Coty, which licenses the fragrance brands of Gucci, Chloe and Burberry, has a market capitalization of about $2.8 billion, according to LSEG data.
(Reporting by Shivani Tanna in Bengaluru, additional reporting by Aishwarya Venugopal; Editing by Rashmi Aich and Anil D'Silva)
