Coty’s special committee announces recommendation of JAB tender offer

By

Robin Driver

Published
Mar 19, 2019

New York-based cosmetics giant Coty Inc. announced on Monday that, having established a series of measures to protect minority shareholders, the special committee of three independent directors formed to evaluate the tender offer commenced by JAB Holding Company on February 13, has recommended that the deal be allowed to proceed.
 

JAB, which already owns a 40% stake in Coty, making it the beauty company’s largest shareholder, has offered to acquire a further 150 million shares in the cosmetics conglomerate at $11.65 per share.

The transaction, which would bring JAB’s stake in Coty up to 60%, has been valued at $1.75. billion.

In a filing with the United States Securities and Exchange Commission, Coty reveals that, as part of the amended deal approved by the board’s special committee, JAB has now agreed to a standstill agreement limiting it to purchasing a maximum of 9% more of the company’s shares for a three-year period following the tender offer.
 
Further amendments negotiated by Coty’s special committee mean that the tender offer’s minimum threshold has been raised to 75 million shares (giving JAB a 50% stake), and that any future attempt to take Coty private by JAB would be subject to independent review and approval of the company’s other shareholders.
 
It was also stipulated that, should the deal go ahead, JAB will maintain at least four independent directors on Coty’s board.

Coty, whose brands include Covergirl, Max Factor, Sally Hansen and Rimmel, posted a net loss of $960.6 million, or $1.28 per share, in the second quarter ended December 31, 2018, while revenues declined 4.8% to $2.51 billion.
 
The company, which has been struggling to adapt to a rapidly evolving beauty market, has only post one quarterly net profit in the last two years.
 
Following the announcement of the special committee’s positive recommendation, shares in Coty were up 3.4% on Monday.