The consumer products giant Procter & Gamble will sell its lineup of 43 beauty brands and have it merge with beauty products maker Coty Inc for $12.5 billion.
P&G said in a statement on its website that Coty will acquire its global salon professional hair care and color, retail hair color, cosmetics and fine fragrance businesses, along with select hair styling brands. P&G described the transaction as a reverse Morris Trust, which was explained in a New York Times article as a way to lower taxes.
P&G said the structure of the deal allows the company to realize a one-time earnings gain o around $5 billion to $7 billion depending on the final deal value at the time of closing.
AG Lafley, Chairman, President and CEO of P&G, said the move allows the company to focus on its core competencies on its portfolio of 10 categories and 65 brands that best leverage P&G's core competencies.
"We have leading global brand positions in these categories, consumer preferred products and leading brands in the largest markets. These businesses and brands have historically grown faster and have been more profitable than the balance. We expect these ten categories to grow and create value as we focus the energy and resources of the company exclusively on them," he said.
Lafley added that the deal with Coty provides the brands P&G is selling an excellent new home for those businesses and the people who are operating them.
The New York Times noted that P&G has been selling several brands to put more focus on key businesses. It added that the company had agreed to sell its battery company Duracell to Warren E. Buffett's Berkshire Hathaway for $4.7 billion in November.
Coty, owned by the European firm JAB Cosmetis B.V., sells fragrances, skin products and cosmetics from brands including Calvin Klein, Marc Jacobs and Chloe.
