Coty offers 4.4 percent Stake for Chanel’s Bourjois Cosmetics Brand

2014-10-08
Published : Oct-2014

Coty Inc said that it has made an offer to purchase cosmetics brand Bourjois of Chanel in a move which would bolster Coty’s presence in Western Europe.

Under the terms of the deal, Chanel would receive 15 million of Coty’s shares, which are valued at around $239.1 million, based on Coty’s closing price on Monday.

According to a joint release Chanel has agreed to enter into exclusive negotiations. Chanel’s representative, Michael Rena said that they intend to examine the offer in more detail and enter constructive talks with Coty.

Coty, the beauty-product maker, whose offerings include fragrances from Calvin Klein and Sally Hansen nail polish, has been pushing for global expansion this year as it expects a growing middle class in developing countries to increase sales. In February, both companies had revealed a plan to sell perfumes of Coty through Avon’s sales representatives in Brazil.

The Bourjois makeup brand could help bolster Coty in markets including Asia, Western Europe and the Middle East. Coty was founded in 1863by Joseph-Albert Ponsin, a French actor. Currently, Bourjois make-up products are sold in about 50 countries around the world and it offers a wide range of cosmetics products such as nail varnish, mascara and eye shadow. Coty which makes perfume for fashion brands such as Marc Jacobs and Calvin Klein and also owns Rimmel mascara and OPI nail polish brand has been suffering from declining profits and sales growth as consumers cut back on discretionary purchases.

Make-up sales of Coty fell 7 percent at constant exchange rates to $1.36 billion in the year to June 2014. Coty’s perfume revenues increased only 1 percent to $2.5 billion.

According to Bart Becht, Coty’s interim Chief Executive, the company’s quality image, strong heritage and leadership positions in a number of Western European countries where Coty is seeking to bolster its presence, will provide a great opportunity for the company to further strengthen its leadership position in the large and growing color cosmetics category.

Chanel makes major proportion of its revenues through best-selling perfumes such as Chanel No.5 and Coco. The luxury company generates approximately $8 billion (6 billion euros) in annual sales.

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