Photo: P&G Headquarters in Cincinatti.
The beauty industry is undergoing one of its biggest shake-ups in recent history with the announcement of a deal between Procter & Gamble Co. and Coty.
Following weeks of speculation, the two beauty conglomerates have confirmed that Coty is buying 43 beauty brands from consumer products giant P&G. The $13 billion deal—which includes leading brands such as CoverGirl cosmetics, Clairol hair color, and Hugo Boss and Dolce & Gabbana fragrances—is part of P&G’s strategy to streamline its sprawling business and focus on marketing everyday staples like its Tide laundry soap and Crest toothpaste.
P&G said it will transfer the brands into a separate company that will then merge with New York-based Coty, whose beauty and fragrance brands include Calvin Klein, OPI, Sally Hansen and Marc Jacobs. P&G has shed about 15 percent of its portfolio of brands, with the latest round accounting for annual sales of $5.9 billion.
In early 2012, Coty made a similar $10.7 billion offer for Avon’s business as the larger company faced lagging sales that continue to affect its bottom line. After two months of back-and-forth, Coty withdrew its bid, citing a “lack of engagement” on Avon’s part.
The P&G merger will position Coty as a global leader in fragrances and boost its share of the color cosmetics market. In a statement, the company said it is looking to build its presence in major beauty markets like Japan and Brazil, where Coty partnered with Avon last year to sell its fragrances through Avon’s 1.5 million Brazilian representatives.