Procter & Gamble Agrees To Sell 43 Beauty Brands For $12.5 Billion

Procter & Gamble is getting out of beauty. The consumer goods giant announced on Thursday that it is selling 43 of its beauty brands, including Miss Clairol, Covergirl and Max Factor.

The $15bn deal hands Coty, a beauty products company, control of P&G’s global salon professional hair care and color, retail hair color, 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% of outstanding stock in the combined company, with Coty shareholders getting 48%.

Cincinnati-based P&G expects a one-time gain of about $5bn-$7bn. Coty anticipates about $550m in cost savings on an annual basis over the next three years and approximately $500m 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 a share.