Kylie Jenner is continuing to stack chips and just boosted her personal portfolio by several hundred million dollars by making a big change in her Kylie Cosmetics company. It was announced on Monday that the 22-year-old makeup mogul unloaded 51% of her cosmetics company for $600 million. The deal was done with Coty, Inc, a New York-based multinational beauty company that owns brands like Guess, Calvin Klein and Adidas. The deal is expected to expand Kylie's brand globally and enter new areas in the beauty market.
A news release was sent out Monday morning detailing the terms of the deal.
"Coty Inc. (NYSE:COTY) and Kylie Jenner announced today that they have entered into a long-term strategic partnership in order to jointly build and further develop Kylie’s existing beauty business into a global powerhouse brand. Together, Coty and Kylie will set and lead the strategic direction of the partnership, focusing on global expansion and entry into new beauty categories. Kylie and her team will continue to lead all creative efforts in terms of product and communications initiatives, building on her unrivalled global reach capabilities through social media."
Kylie's Not Going Anywhere
Even though Kylie may have sold off the majority of her company, she will still be involved in the creative direction of the brand. Kylie also released a statement detailing her excitement about the future of Kylie Cosmetics.
"I’m excited to partner with Coty to continue to reach even more fans of Kylie Cosmetics and Kylie Skin around the world. I look forward to continuing the creativity and ingenuity for each collection that consumers have come to expect and engaging with my fans across social media. This partnership will allow me and my team to stay focused on the creation and development of each product while building the brand into an international beauty powerhouse.”
Terms of the Deal
Per Coty's release, they will be acquiring a 51% ownership in the partnership for $600 million. However, they are confident the deal will only mean a huge opportunity of revenue growth in the near future.
"Coty expects the transaction will be accretive to the net revenue growth of its core fragrance, cosmetics and skin care portfolio by more than 1% p.a. over the next three years. The transaction is expected to be neutral to Coty’s earnings per share (EPS) in year one, and accretive thereafter. The ROIC of the transaction is expected to exceed Coty’s cost of capital by Fiscal 2023. Kylie Cosmetics realized an estimated $177M net revenues for the trailing twelve months (TTM)."
The deal is expected to wrap up in the third quarter of the next fiscal year. The CEO of Coty is also excited, and spoke about the big plans for Kylie's brand.
"We are pleased to welcome Kylie into our organization and family. Combining Kylie’s creative vision and unparalleled consumer interest with Coty’s expertise and leadership in prestige beauty products is an exciting next step in our transformation and will leverage our core strengths around fragrances, cosmetics and skincare, allowing Kylie’s brands to reach their full potential.”