NEW YORK (TheStreet) -- Shares of Coty Inc. (COTY) are gaining by 13.04% to $29.47 in pre-market trading on Tuesday morning, following reports that over the weekend the cosmetics and fragrance company has won an auction to acquire Proctor & Gamble's (PG) beauty businesses.
The assets are valued at about $12 billion, sources told Reuters. The publication added that if the transaction goes through it will be the largest cosmetics deal in at least 10 years and transform Coty into a leader in perfume and hair care.
The transaction, which sources told Reuters could take at least two weeks, will be completed through a "Reverse Morris Trust." What that means is, for tax purposes, P&G will spin off its beauty assets into a separate company which will then merge with Coty.
Separately, TheStreet Ratings team rates COTY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate COTY INC (COTY) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."