Dollars & Scents: Coty plans to raise $700M in IPO
Coty Inc., known for its celebrity fragrances and OPI nail polish, is set to put its best face forward on the stock market. The beauty products maker is planning to raise $700 million in an initial public offering, moving on after dropping a $10.7 billion takeover bid for its much larger rival, Avon.
The New York company, which touts fragrances by Jennifer Lopez, Celine Dion and Halle Berry, said in a regulatory filing Friday that its stock will list under the "COTY" ticker symbol. The company did not specify yet whether it would be on the Nasdaq or the New York Stock Exchange.
IPO listings have increasingly come into focus since Facebook Inc.'s IPO last month. Nasdaq, which is owned by Nasdaq OMX Group Inc., came under heavy criticism for its handling of the Facebook IPO when the first day of trading was riddled with computer glitches at the exchange. But earlier this month Kraft Foods Inc. spurned the NYSE in favor of the Nasdaq, saying the move will help cut costs as it prepares to split into two publicly traded companies.
Coty, founded in Paris in 1904, has managed to successfully broaden its business to cover an array of personal health and beauty needs. While some consumers may not know the company's name offhand, they more than likely have used some of its brands. Rimmel, Sally Hansen and philosophy are just a few of the well-known products in its arsenal of beauty goods.
The company disclosed in its filing with the Securities and Exchange Commission that its color cosmetics will likely make up 30 percent of its fiscal 2012 revenue, while skin and body care will comprise 17 percent.
But the majority of its revenue — 53 percent — is expected to come from its fragrances. While the fragrance space is highly competitive, Coty has managed to diversify its portfolio of scents: shrewdly capitalizing on the popularity of celebrity fragrances while staying true to longstanding brands like Stetson and Calvin Klein.
This strategy has helped the company snag the No. 2 spot in the global fragrance market.
Coty said its top 10 brands — adidas, Calvin Klein, Chloe, Davidoff, Marc Jacobs, philosophy, OPI, Playboy, Rimmel and Sally Hansen — are expected to comprise about 70 percent of its fiscal 2012 revenue.
The company, which is majority owned by German conglomerate Joh. A. Benckiser, did not give an estimated price range for the stock or disclose how many shares selling stockholders would offer. Coty said it won't receive any proceeds from shares sold by selling stockholders.
Aside from Benckiser, Warren Buffett's Berkshire Hathaway Inc. and private equity firm Rhone each hold a 7.5 percent stake in Coty.
Coty said in its filing that it anticipates more than $4.5 billion in revenue in fiscal 2012. In 2011 it earned $61.7 million on revenue of $4.09 billion. That compares with 2010 earnings of $61.7 million and $3.48 billion in revenue. Coty's 2011 adjusted profit grew to $235 million from $153.4 million a year earlier.
Last month Coty abandoned its pursuit of Avon Products Inc. after the struggling makeup company did not immediately accept a revised offer worth 6.5 percent more than its first bid.