Coty Sells Remaining Stake in Wella to KKR

Key Terms

preferred return financial

Preferred return is a minimum annual return that certain investors are promised before the manager or owner shares in profits; think of it as the first slice of earnings that gets paid out like a priority lane. It matters to investors because it reduces downside risk and sets a performance benchmark — managers only earn their performance-based share after this preferred amount is delivered, so it affects expected cash flow timing and alignment of incentives.

initial public offering financial

An initial public offering (IPO) is when a private company first sells its shares to the public and becomes a stock-listed company. It matters because it allows the company to raise money from a wide range of investors, helping it grow, while giving early shareholders a way to sell some of their ownership.

free cash flow financial

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

leverage ratio financial

Leverage ratio measures how much a company relies on borrowed money compared with its own funds or assets, typically expressed as debt relative to equity or total assets. Like a homeowner with a mortgage, higher leverage can amplify returns when business is strong but also raises the chance of big losses or default if revenue falls, so investors use it to judge financial risk and resilience.

forward-looking statements regulatory

Forward-looking statements are predictions or plans that companies share about what they expect to happen in the future, like estimating sales or profits. They matter because they help investors understand a company's outlook, but since they are based on guesses and assumptions, they can sometimes be wrong.

• $750 million of immediate cash proceeds and right to significant share of ongoing proceeds after KKR preferred return
• Marks successful completion of multi-year Wella monetization program exactly inline with its original target to divest Wella by end of CY25
• Transaction reduces Coty’s financial net leverage to ~3x by the end of CY25, strengthening its path towards 2.0x

NEW YORK--(BUSINESS WIRE)-- Regulatory News:

Coty Inc. (NYSE: COTY) (Paris: COTY) (“Coty” or “the Company”) today announced that it has sold its remaining 25.8% stake in Wella to KKR managed capital accounts and investment affiliates. Under the terms of the transaction, Coty will receive upfront cash consideration of $750 million and 45% of any proceeds from a further sale or an initial public offering of the business, after KKR’s preferred return has been met. Based on Wella’s strong recent and expected performance, as well as current market valuations, Coty sees strong potential for additional cash proceeds, bringing the total gross proceeds closer to the carrying value of its investment in Wella. The sale completes the program initiated in 2020 to simplify Coty’s portfolio and operations, while realizing the full value of its Wella business.

Coty intends to use the vast majority of the Wella upfront cash proceeds related to this transaction, net of tax, to pay down its short term and long term debt. Both the Wella proceeds and Coty’s strong free cash flow generation (over $350 million in the first half of FY26, inline with its recent guidance) are expected to reduce Coty’s financial net leverage to ~3x by the end of CY25.

“This transaction marks a pivotal milestone for Coty – both in our transformation and in our long-running deleveraging commitment,” said Laurent Mercier, Coty’s CFO. “Our strategic partnership with KKR has proven highly value accretive. We have benefited from Wella’s strong growth by progressively monetizing our stake, allowing us to strengthen Coty’s financial foundations year-after-year. Completing this transaction exactly inline with our original target to fully divest Wella by the end of CY25 underscores our focus on delivering on our financial commitments and crystallizing value from non-core assets, all while sharpening our strategic focus.”

Citi is serving as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor to Coty. Simpson Thacher & Bartlett LLP is serving as legal counsel to KKR.

About Coty Inc.

Founded in Paris in 1904, Coty is one of the world’s largest beauty companies with a portfolio of iconic brands across fragrance, color cosmetics, and skin and body care. Coty serves consumers around the world, selling prestige and mass market products in over 120 countries and territories. Coty and our brands empower people to express themselves freely, creating their own visions of beauty; and we are committed to protecting the planet. Learn more at coty.com or on LinkedIn and Instagram.

Forward Looking Statements

Certain statements in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current views with respect to, among other things, the use of proceeds from the sale transaction and the expected impact on Coty’s future results and financial condition as a result of the transaction including net debt and leverage ratio, as well as the extent and timing of any future profit distributions. These forward-looking statements are generally identified by words or phrases, such as “anticipate”, “are going to”, “estimate”, “plan”, “project”, “expect”, “believe”, “intend”, “foresee”, “forecast”, “will”, “may”, “should”, “outlook”, “continue”, “temporary”, “target”, “aim”, “potential”, “goal” and similar words or phrases. These statements are based on certain assumptions and estimates that we consider reasonable, but are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual events or results (including our financial condition, results of operations, cash flows and prospects) to differ materially from such statements, including risks and uncertainties relating to the timing and cost of redemptions of the Company’s outstanding debt or other deleveraging activities, the timing and terms of any future Wella exit transaction by KKR and any related future profit distribution, and other factors described elsewhere in documents that the Company files with the SEC from time to time.

View source version on businesswire.com: https://www.businesswire.com/news/home/20251218080255/en/

For more information:

Investor Relations

Olga Levinzon, +1 212 389-7733

olga_levinzon@cotyinc.com

Media

Antonia Werther, +31 621 394495

antonia_werther@cotyinc.com

Source: Coty