Coty Inc. is seeking as much as $700 million in an initial public offering after the maker of perfumes by Beyonce Knowles and Heidi Klum pulled a takeover offer for Avon Products Inc. (AVP:US)
All the shares in the IPO will be offered by existing shareholders, the New York-based company said today in a filing. Coty withdrew its sweetened $10.7 billion bid for Avon on May 15, citing the cosmetics seller’s refusal to negotiate.
After failing to gain control of Avon’s global door-to-door sales network, Coty is working to spur revenue by entering new regions and expanding distribution of brands in emerging markets such as Rimmel and Adidas body-care products in China. The company said it also seeks to use additional distribution channels including direct television sales and e-commerce.
Coty projects net revenue of more than $4.5 billion in the fiscal year 2012 and anticipates to generate cash flow from operations of more than $550 million, an increase from $417.5 million in the previous year, according to the filing. In the 12 months ended March 31, the company had operating income of $304 million.
Coty, which holds perfume licenses for brands including Calvin Klein and Marc Jacobs, was founded in 1904 in Paris by Corsican-born Francois Coty. The company helped develop perfume into a mass product, with 36 million consumers two decades later. Coty’s previous purchases include $400 million for a majority stake in Chinese skin-care company TJoy Holdings Ltd. in December 2010.
The IPO is set to be the biggest in the U.S. so far this year in the consumer sector, according to data compiled by Bloomberg. Coty hired Bank of America Corp. (BAC:US), JPMorgan Chase & Co. and Morgan Stanley (MS:US) to manage the offer.
Coty may also seek to make acquisitions, with potential targets including Natura Cosmeticos SA of Brazil, Oriflame Cosmetics SA, the beauty care unit of Japan’s Kao Corp. and France’s Yves Rocher Group, Vivienne Rudd, a personal-care industry analyst at Mintel International, said last month.
JAB Holdings II BV holds 80.5 percent of Coty, according to the filing. Entities affiliated with Berkshire Partners LLC, a private-equity firm based in Boston, owns 7.5 percent, as do entities affiliated with the Rhone Group LLC.
Coty Chairman Bart Becht had targeted Avon to add a door- to-door distribution channel for its cosmetics and more than double its annual sales from brands including Cerruti and Wolfgang Joop.
After “continued delay and unwillingness” by Avon to engage in discussions, “it is time for Coty Inc. to move on and pursue other opportunities,” Becht said last month, as the company announced it was pulling its $24.75 a share offer for Avon.
IPOs globally raised $41.3 billion this quarter through yesterday, the worst April-June period since 2009, data compiled by Bloomberg show. At least 50 companies shelved sales as Europe’s debt crisis spread and growth prospects in China dimmed.
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