Cosmetics company Coty (COTY 3.64%) 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.
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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 3.71%) 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 0.77%) will be collaborating with West to create a new apparel line for his Yeezy brand.
