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The Company That Wants to Buy Coty

By Bradley Freeman – May 28, 2020 at 1:27PM

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After a few failed agreements, an acquisition deal may be in the works.

News broke this week on a potential acquisition of American beauty company Coty Inc (COTY -7.05%) by German consumer goods company Henkel AG & Co. (HENO.Y)

The sale would be a total takeover of Coty and would result in the complete rollup of all company assets into Henkel. In the past, Henkel has expressed separate interest for parts of Coty as well as the entire company; now, they want it all.

A hairdresser wearing a mask gives a client a haircut.

Image source: Getty Images.

Potential premium

The deal is rumored to be for a price of $6 to $6.50 per share, with the current Coty stock price sitting at roughly $4.40. Based on the current purchase price, any approved acquisition could carry with it a common equity premium of up to 46% percent for shareholders. 

The deal, however, is far from a guarantee. Just weeks ago, two promising rumored Coty sales to Henkel and private equity firm KKR & Co. Inc. (KKR -2.71%) both fell apart before an agreement could be reached. The coronavirus closing down salons and beauty parlors halted much of Coty's operations, and as a result, an agreement could not be made. In times of such chaos and panic this makes sense, but now that chaos is starting to wane.

This time around, investors will be eagerly looking to see if acquisition rumors come to fruition.

Bradley Freeman has no position in any of the stocks mentioned. The Motley Fool recommends KKR. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Coty Inc. Stock Quote
Coty Inc.
COTY
$7.38 (-7.05%) $0.56
KKR & Co. Stock Quote
KKR & Co.
KKR
$43.89 (-2.71%) $-1.22
Henkel AG & Co. KGaA Stock Quote
Henkel AG & Co. KGaA
HENO.Y

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