Coty Inc. (COTY) - Get Report shares bounced backed Monday as investors reacted to a shake-up of its senior management team following reports that alleged Kylie Jenner had overstated her personal wealth to boost the value of a brand sold to the cosmetics group.
Coty Chairman Peter Harf was named to replace the outgoing Pierre Laubies as CEO of the struggling cosmetics group, following a company-wide strategic review that was launched earlier this year. Coty will also create a three-person executive committee it says will "will make sure that Coty takes the right steps towards becoming a more profitable business and delivering on its commitments."
The moves followed last month's investment from private equity group KKR & Co. KKR, which injected $750 in cash, and could add a further $3.25 billion, via the purchase of a majority 60% stake in its professional beauty and retail hair division once it's carved out of the Coty group. That deal, which values Wella at $4.3 billion on an enterprise basis, was confirmed Monday.
“I’ve known Coty for a long time and there is a lot of potential within this company. I’m delighted to return to an active leadership role," Harf said. "We are all energized by the task ahead – to lead Coty to the best it can be. Further, in KKR, we have a world-renowned investor that will work alongside us in transforming Coty.”
Coty shares were marked 21% higher in early trading Monday to change hands at $4.39 each, a move that would still leave the stock with a year-to-date decline of around 61%.
The management shake up also follows a Friday collapse for Coty shares following a report from Forbes that suggested Jenner, who sold 51% of her 'Kyle Cosmetics' line to the company last year for around $600 million, had inflated its value to the media. Forbes also said that Kris Jenner, Kylie's mother, was a part-owner of the cosmetics line that earns a profit from Coty sales.
Forbes, which dropped Jenner from its billionaire's list, stood by the report even as Jenner, who became famous alongside her Kardashian family members, said it was full of "a number of inaccurate statements and unproven assumptions."