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TheDeal: Coty Targets $1.2B Public Debut

NEW YORK ( TheStreet) -- Coty Inc. is finally nearing its promised initial public offering, a little more than a year after it abandoned its bid to acquire Avon Products Inc. (AVP - Get Report) for nearly $10 billion.

The New York-based fragrance and beauty conglomerate revealed in an amended S-1 filing with the Securities and Exchange Commission on Tuesday that it plans to raise more than $1.2 billion. Selling stockholders will unload about 57.14 million shares at $16.50 to $18.50 per share, the filing said.

Coty said it will not receive any proceeds from the IPO. Coty will trade on the New York Stock Exchange under the ticker symbol COTY.

Selling shareholders include Germany-based holding company Joh. A. Benckiser GmbH, Boston-based private equity firm Berkshire Partners LLC and New York-based Rhone Capital LLC, the private equity arm of investment bank Rhone Group LLC.



Joh. A. Benckiser, controlled by the billionaire Reimann family, plans to sell nearly 43.56 million of its roughly 313.4 million shares. At the midpoint of the price range, Joh. A. Benckiser would reap about $762 million.

Berkshire and Rhone, meanwhile, will unload about 6.79 million shares apiece. Each firm owns approximately 27.17 million shares.

After the offering Joh. A. Benckiser, Berkshire and Rhone will control 84.9%, 6.4% and 6.4% of the total voting power, respectively.

Underwriters have the option to purchase an additional 8.57 million shares. Joint bookrunning managers for the IPO are Bank of America Merrill Lynch, JPMorgan Securities LLC, Morgan Stanley, Barclays plc, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC.

Lead managers, co-managers and junior co-managers include Lazard Capital Markets LLC, Piper Jaffray & Co., RBC Capital Markets LLC, BNP Paribas Securities Corp., Credit Agricole Securities Inc., HSBC Securities (USA) Inc., ING Financial Markets LLC, Moelis & Co. LLC, RBS Securities Inc., Sanford C. Bernstein & Co. LLC, Santander Investment Securities Inc., Samuel A. Ramirez & Co., Telsey Advisory Group LLC and Williams Capital Group LP.

Law firms Gibson, Dunn & Crutcher LLP and Davis Polk & Wardwell LLP are providing Coty with legal advice on the offering.

Coty is known for brands it owns such as nail care companies OPI Products Inc., Sally Hansen, skin-care and color cosmetics business Philosophy Inc., Dr. Scheller Cosmetics AG, TJoy Holdings Ltd. of China and color cosmetics line Rimmel.



Sally Hansen was picked up when Coty acquired its parent Del Laboratories Inc. for about $800 million from Kelso & Co. in 2007. In 2010, Coty bought both Philosophy and OPI, each for a reported $1 billion. Philosophy at the time was owned by Carlyle Group and OPI was acquired from founder and CEO George Schaeffer.

Coty also licenses brand names for its fragrance business. It is most famous for its extensive Calvin Klein line of perfumes and colognes. It also licenses the Beyonce, Lady Gaga, David Beckham, Marc Jacobs, Balenciaga and Chloe names for fragrance.

Fragrance constituted 53% of Coty's net revenue in fiscal 2012, ended June 30, 2012, or nearly $2.5 billion, while color cosmetics comprised 31% of net revenue, or about $1.4 billion. Skin and body care represented 16% of net revenue, or nearly $730 million.

Coty had nearly $634 million in Ebitda and revenue of about $4.6 billion, according to data provided by Bloomberg News.

Total common stock outstanding after the offering will be about 382.8 million shares, giving the company a market capitalization of nearly $6.7 billion at the midpoint of its price range.

As of March 31, Coty had cash and cash equivalents of nearly $783 million and total debt of nearly $2.5 billion, giving the company an enterprise value of about $8.4 billion, a multiple of nearly 13.3 times Ebitda.

Comparatively, Estee Lauder Cos. has an enterprise value of about $27.6 billion and Ebitda of approximately $1.83 billion for the 12 months ended March 31, giving it a multiple of nearly 15.1 times Ebitda, according to data provided by Bloomberg.



Coty filed an amended S-1 filing with the SEC on May 14, updating its financials. For the nine months ended March 31, revenue was nearly flat year over year, at about $3.59 billion. Net income leaped to approximately $258 million, from about $58 million, over the same nine-month period the year before.

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