Coty share price hits record high amidst P&G acquisition rumor
Share prices hit an all-time high of $32.45 at the close of business on Friday, June 26, as investors and analysts grow more confident that a deal is about to be announced.
Share prices have more than doubled in less the space of just eight months, since hitting a 12-month low of $15.94 on October 6th last year, reflecting investor interest in a business that is on an acquisition trail.
Coty revenues set for big expansion
Revenues for the financial year ending June 2015 are expected to hit the $5bn mark, but with the acquisition of the P&G brands, that turnover looks to more than double.
In April of this year Coty confirmed the acquisition of a controlling stake in the Bourjois cosmetics brand after buying if from Paris-based luxury consumer goods company Chanel.
It made a successful bid of $239m for a controlling stake in the Bourjois business, which is tiny compared to the size of the rumored P&G bid, but still gave it an important footing in the luxury color cosmetics segment in Western Europe, the Middle East and Asia Pacific.
Coty has been widely rumored to be in late stage talks to buy a number of the P&G beauty and fragrance brands that are estimated to have a value of $12bn, an acquisition that would not only grow but diversify the Coty business significantly.
The CEO that never was
Speculation over the pending deal with P&G grew even more heated last week, after it was announced that newly appointed CEO Elio Leoni Sceti would no longer be taking up the role at Coty on July 1st and that Bart Becht will continue to serve as interim CEO instead.
In light of the decision, B. Riley analyst Linda Bolton circulated a note stating her belief that the reason behind the Sceti announcement may reflect the magnitude of the pending P&G deal and the fact that he might not have the right experience to take on a business in the midst of such a significant expansion.
“With three major businesses being acquired, Coty and JAB Holdings [one of Coty’s major stockholders] decided that Sceti was not up to the task of integrating such a big deal and at the same time reigniting organic sales growth at the company,” Weiser’s note stated.