P&G to spin off beauty brands to Coty in US$12.5bn deal
The transaction includes well-known brands such as hair dyes Nice & Easy and Miss Clairol, and Hugo Boss and Gucci fragrances.
The consumer products giant said the spin-off was part of its strategy to streamline its secondary brands in order to better promote best-sellers like Gillette razors and Head & Shoulders shampoo.
"This represents a significant step forward in the work to focus our portfolio on 10 categories and 65 brands that best leverage P&G's core competencies," said chief executive AG Lafley.
Complete details of the deal are not settled, but P&G hopes to structure it as a "Reverse Morris Trust" in which, to minimise taxes involved in the sale, Coty would take over the brands and P&G shareholders would have the option to exchange some of their P&G shares for Coty shares.
P&G said the deal will result in a one-time gain of $5-$7 billion.
The transaction will be a game-changer for Coty, which in 2014 had revenues of $4.6 billion. The combined company will have revenues of more than $10 billion, it said.
"With the Beauty talent from both sides and the fantastic portfolio of world-class brands, we have the opportunity to create a highly focused, pure-play leader and challenger in Beauty which can deliver exciting opportunities and benefits for employees, licensors, customers and suppliers," said Coty chief executive Bart Becht.
At mid-morning, Coty shares fell 5.6% to $29.77, while Dow member P&G rose 0.1% to $81.04.