P&G offloads CoverGirl cosmetics line

Procter & Gamble Co. completed the split-off of its CoverGirl cosmetics line and 40 other beauty brands to Coty Inc. in a deal valued at $11.4 billion before the stock market opened on Monday.

“This effectively completes the major work we undertook two years ago to streamline and strengthen our product portfolio,” said David Taylor, CEO of Cincinnati-based P&G (NYSE: PG). “We are now focused on 10 product categories and about 65 brands where P&G has leading market positions and where product technologies deliver performance differences that matter most to consumers.”

About 10,000 people no longer have jobs with P&G as a result of the deal, including 200 at its Cincinnati headquarters or other local offices. P&G now has a total of 95,000 employees, including 10,300 in Greater Cincinnati.

“I want to share my personal thanks to all the employees who have transitioned to Coty,” Taylor said in a statement issued today by P&G. “They showed amazing dedication during a period of uncertainty – demonstrating time and time again the strong character of P&G people. I thank them for everything they did during the transition and for all their years with P&G and wish them an exciting future with Coty.”

With the completion of the merger on Saturday, Coty (NYSE: COTY) is now the third-largest beauty company in the world, with about $9 billion in revenue, said Camillo Pane, the new CEO of the company.

“We have brought together a powerful portfolio of much-loved beauty brands and some of the world’s most talented people in beauty and consumer goods,” Pane said in a Coty statement issued today.

Coty expects to achieve cost savings of $750 million, or 16 percent of acquired revenues, through synergies. That will be reflected in P&G costs of $350 million that don’t transfer and $400 million in cost synergies of over four years “achieved through a range of efficiency opportunities that the combination of the two businesses create.”

Coty, which had already included brands such as Calvin Klein fragrances and Adidas deodorant, said it now holds the No. 1 position in fragrances and No. 2 and 3 positions in salon hair and color cosmetics.

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