In another chapter of the ongoing saga of businesses struggling amid the COVID-19 pandemic, Coty (NYSE:COTY) announced today that Peter Harf, the company's chairman, will take over as CEO to attend to the company's turnaround.

Coty has seen its business decline as customers move toward higher-end lines, and it's been saddled with debt since it struck an ill-fated deal to buy $12 billion worth of low-end cosmetics brands from Procter & Gamble in 2016. Efforts to recharge those brands were stalled by the arrival of COVID-19. 

Woman testing cosmetics.

Image source: Getty Images.

Major changes for much-needed improvements

Harf was CEO of Benckiser N.V. before it merged to create Reckitt Benckiser, of which he became deputy chairman in 1999, where he developed the Coty brand. He is currently a managing partner at investment firm JAB Holdings, which is Coty's largest shareholder.

JAB also has large holdings in Keurig Dr. Pepper and Krispy Kreme Doughnuts in addition to several other companies.

Pierre-André Terisse will take over as COO and CFO of the company and Gordon von Bretten is the company's first chief transformation officer.

Agreement with KKR

Von Bretten comes from KKR Capital (NYSE:KKR), where he was responsible for making changes at other struggling companies. Coty had been rumored to be in talks with KKR as a takeover candidate, and the company said today that it will sell 60% of its retail and professional hair care business to the investment firm for a $1 billion direct investment and total $2.5 billion net cash proceeds. The business is valued at $4.3 billion and Coty retains a 40% stake in the business. 

The $1 billion payment buys Coty shares at $6.24, 20% above the closing share price of $5.20 on May 8, the last trading day before the deal was confirmed. JAB remains the company's largest shareholder with 50%, and KKR becomes the second largest with a 17% stake.