Please ensure Javascript is enabled for purposes of website accessibility

Coty to Pay $200 Million for a Stake in Kim Kardashian West’s Beauty Business

By Howard Smith – Jun 29, 2020 at 9:56AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The partnership expands the cosmetic company's relationship with the Kardashian and Jenner family.

Cosmetics company Coty (COTY -1.86%) today announced a new strategic partnership with Kim Kardashian West. The company will take a 20% stake in Kardashian West's beauty business for $200 million. Together, the partners will expand the business globally and enter new beauty categories, the company said. 

Coty already has a business relationship with Kardashian West's half-sister, Kylie Jenner. In January 2020, the two parties closed a transaction in which Coty acquired a 51% stake in Jenner's beauty business for $600 million. 

cosmetics and application brushes on a black table

Image source: Getty Images.

The struggling beauty company has been taking steps to increase liquidity and reduce costs this year. Earlier this month, the company signed an agreement with investment firm KKR (KKR -0.21%) that helped deleverage the company with a $1 billion direct investment via convertible preferred shares, and $2.5 billion in net cash proceeds. The cash comes from a 60% ownership stake KKR will take in Coty's professional and retail hair business, which includes Wella, Clairol, and other brands. In its most recent quarterly earnings call, Coty also said it plans to reduce its fixed cost base by 25%, or $700 million. 

The Kardashian West partnership helps Coty reach more consumers, it believes. CEO Peter Harf noted Kardashian West's popularity, saying, "through social media, [she] has an unparalleled ability to connect with people around the world." Coty believes it can help the Kardashian West business achieve its full potential. 

Kardashian West's husband, Kanye West, also announced a partnership with a major retailer last week. Clothing retailer Gap (GPS 5.20%) will be collaborating with West to create a new apparel line for his Yeezy brand. 

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

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Coty (Class A) Stock Quote
Coty (Class A)
COTY
$6.86 (-1.86%) $0.13
Gap Stock Quote
Gap
GPS
$9.72 (5.20%) $0.48
KKR Stock Quote
KKR
KKR
$47.29 (-0.21%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.