Procter & Gamble to sell beauty brands

Coty is buying 43 beauty brands from Procter & Gamble Co., including Miss Clairol, Covergirl and Max Factor.

P&G, maker of Tide laundry soap, Crest toothpaste and a multitude of other products, said Thursday that it puts the deal's value at about $15 billion. That includes stock valued at about $13.1 billion and $1.9 billion in debt, but the debt could range between $1.9 billion and $3.9 billion.

The sale is part of a long-running effort at Procter & Gamble to shed some of its dozens of brands and focus on those where it is strongest. Last year, P&G made a deal to sell the Duracell battery brand to Warren Buffett's Berkshire Hathaway.

The plan is to pare off about 100 brands, leaving about 65 in the P&G stable.

The Coty deal includes P&G's global salon professional hair care and colour, retail hair colour, cosmetics and fine fragrance businesses, and certain hair styling brands. Other brands included in the transaction are Sebastian Professional, Sassoon Professional, Natural Instincts and Nice & Easy.

Reports circulated last month that Coty might buy several brands from consumer products maker P&G, which announced in August that it was looking to shed many of its brands.

Coty sells fragrances, cosmetics and skin and body care products under brand names including Calvin Klein, Marc Jacobs, OPI and Sally Hansen. The New York company said that the transaction will boost its product offerings and expand its global reach, particularly in markets like Brazil and Japan.

The final details of the deal structure aren't worked out yet, but P&G wants it structured as a Reverse Morris Trust, which will have the beauty business separated from P&G and merged with a Coty subsidiary. P&G shareholders would receive 52 per cent of outstanding stock in the combined company, with Coty shareholders getting 48 per cent.

Investors sent Coty shares down more than 5 per cent to $29.72 in midday trading. P&G shares rose 27 cents to $81.26.

Cincinnati-based P&G expects a one-time gain from the deal of about $5 billion to $7 billion. Coty anticipates about $550 million in cost savings on an annual basis over the next three years and approximately $500 million in one-time costs.

The transaction is expected to close in the second half of 2016, at which point Coty anticipates raising its annual dividend to 50 cents per share.