Coty Inc. announces plans of getting a 20% stake in Kim Kardashian West’s beauty line

Coty Inc. (NYSE: COTY) announced plans of getting a 20% stake in KKW (Kim Kardashian West’s beauty line) for £163 million on Monday. The cosmetic maker acknowledged that the celebrity-owned products have been greatly in demand as it moved to cash in on it. Coty was also reported to have filed for a patent for personalised perfumes last week.

Shares of the company were reported 14% up in premarket trading on Monday. At £3.74 per share, Coty is currently a little under 60% down year to date in the stock market after recovering from an even lower £2.65 per share in May. Learn more about how do people make money on the stock market.

Coty expects the deal to be completed in Q3 of fiscal 2021

The deal values KKW at £810 million. In January, the New York-headquartered company had also made a sizeable investment to get a majority stake in Kylie Jenner’s cosmetics line. Coty has been struggling to pull out of a debt pile. Collaborating with celebrities-endorsed brands, the company hopes to fuel demand for its products in millennial customers that are known to prefer niche brands.

According to the American multinational beauty company, the transaction is likely to be completed in Q3 of fiscal 2021. As part of the agreement, Coty will also take it upon itself to develop personal care, hair care, nail care, and skincare products for KKW.  

Coty sold its majority stake in the retail haircare business to KKR

As the Coronavirus pandemic that has infected more than 2.6 million people in the United States and caused a little over 125,000 deaths weighed on the cosmetics industry at large, the owner of Max Factor took a significant hit in recent months. Partnering with digital-native brands, Coty said, will contribute to reviving its sales after a temporary shutdown of its countrywide salons due to COVID-19.

In the first week of June, Coty revealed to have signed an agreement with KKR (American global investment firm) to sell its majority stake in the retail nail and haircare business including Clairol and Wella for £2.44 billion. The company also named chairman Peter Harf as the new CEO to replace Pierre Laubies earlier this month.

Coty performed fairly upbeat in the stock market last year with an annual gain of about 60%. At the time of writing, the beauty company has a market cap of £2.86 billion.