Henkel and Coty bid for P&G brands as analysts say deals could ‘make sense’


- Last updated on GMT

D&G, Hugo Boss, and Wella - brands on their way out?
D&G, Hugo Boss, and Wella - brands on their way out?

Related tags Procter & gamble Private equity

Henkel and Coty have made billion dollar bids to buy separate parts of Procter & Gamble’s beauty businesses, as the consumer goods giant looks to divest some of its cosmetics brands as it looks to better align its portfolio.

According to news agency Reuters, the two made separate bids for different brands worth up to a total of $12 billion, this week, as P&G looks to continue its cost-cutting strategy, which was first announced by company CEO A.G. Lafley last year.

Reuters claims that Henkel made an offer for P&G's hair care business, which includes the Wella and Clairol brands, and could fetch a valuation of $5 billion to $7 billion, though private equity firm KKR & Co also submitted a bid for the same business.

At present the news is all very hush-hush from the companies involved, but Reuters also claims that Coty submitted bids for the Cincinnati-based firm’s fragrance unit and its cosmetics business.

US companies Clayton Dubilier & Rice and Warburg Pincus are also said to be interested in these areas of P&G’s business.

Sales make sense says Euromonitor

P&G previously stated plans to divest 90-100 brands and has been slowly selling off some of its non-core brands in a bid to cut costs, and Euromonitor senior analyst Oru Mohiuddin says that Wella and Braun, are two of the bigger names that would make sense to lose.

“It makes sense for P&G to divest non-core brands failing to generate incremental revenue growth for the company, brands that do not align with the company's overall growth model, and smaller fragmented brands with limited regional focus,”​ she says.

An example of a failing brand would be hair care line Clairol which has been losing sales, as are Londa Professional and Wash & GO, according to Euromonitor figures.

P&G would benefit from exiting premium fragrances too, according to Mohiuddin, as the category is more competitive in comparison to mass fragrances, with Dolce & Gabbana and Hugo Boss, two companies subject to the aforementioned bids, likely to sell at a high premium as they are strong brands.

​[In colour cosmetics] the company also has two strong brands, Max Factor and Cover Girl ​[two of the other brands linked in this week’s bids], which could help the company to sell its interests in this area at an attractive price,”​ explains Oru.

Related topics Business & Financial

Related news