Coty Inc. (COTY:US), maker of perfumes endorsed by Beyonce and Heidi Klum, dropped in New York trading after raising about $1 billion on behalf of existing holders in an initial public offering yesterday.
The stock fell less than 1 percent to $17.36 as of 4:02 p.m. Coty’s owners including the billionaire Reimann family sold 57.1 million shares for $17.50 each, after offering them for $16.50 to $18.50 apiece.
The Reimanns maintained control over the company by allowing themselves 10 votes per share, compared with one vote for new shareholders. Coty is seeking to increase sales from developing markets and add skin-care products to its offering.
“There’s a lot of competition, and they have significant exposure to the Europe region, which has been hampered by challenging macro conditions,” said David Wu, an analyst at Telsey Advisory Group in New York. “However, they are a strong player with compelling global brands. That should enable them to capture further market share over the long run.”
At the offering price, Coty had an enterprise value of about $8.6 billion including net debt, or about 11 times earnings before interest, taxes, depreciation and amortization in the 12 months through March 31, data compiled by Bloomberg show. Avon Products Inc. and Estee Lauder Cos. (EL:US), which Coty names as competitors, traded at enterprise values of about 14 times Ebitda during the same period, as of the close on June 11, the day before the offering.
Joh. A. Benckiser, the Reimanns’ Luxembourg-based investment arm, planned to retain an 85 percent voting stake while paring its equity holding to about 70 percent, filings show.
In fiscal 2012, more than half (COTY:US) of Coty’s $4.61 billion in sales came from fragrances, 31 percent from color cosmetics and 16 percent from skin and body care, filings show. Coty agreed to pay $400 million for Chinese skin-care company TJoy Holdings Ltd. in December 2010 to gain access to its distribution channels.
Coty is likely to make further acquisitions in higher-growth areas such as skin care, Wu said.
Berkshire Partners LLC, which has no relation to Warren Buffett’s Berkshire Hathaway Inc., and Rhone Capital LLC also planned to sell stock in the IPO.
New York-based Coty was founded in 1904 in Paris by Corsica-born Francois Coty. The company owns the color cosmetics brand OPI and has a licensing agreement to sell the Adidas line of skin-care products.
Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley led the sale. The stock is listed on the New York Stock Exchange under the symbol COTY.
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