Shares of (COTY) are soaring after privately-held European conglomerate JAB Holdings announced a partial tender offer to buy more shares of the cosmetics maker.
TENDER OFFER: Private equity firm JAB holding announced a tender offer to increase its stake in Coty by 150M shares. The offer price is $11.65 per share, and a successful offer would bring its total holdings to just under 451M shares, or about 60% of the company's common stock, JAB said. The offer represents a premium of approximately 21% to yesterday's closing share price, it added.
LETTER TO COTY'S BOARD: In a letter to Coty's board, JAB said it has been an investor in the company for nearly three decades "and expects to remain so." JAB said it believes that Coty has the potential to address its challenges and prosper over the long-term, and that the company's recent management changes are "an important first step" in addressing its recent performance. "We understand that not all investors may share our long-term approach and we expect that shareholders will value the opportunity to obtain a significant premium for their shares," JAB said in the letter. The firm added that it expects that Coty's board members will consider the proposal in the interests of all shareholders, determine the company's course of action in response, adding that it believes its offer to be "very full and compelling." It added that if Coty's independent directors "do not have a similar view," it will not proceed with the offer. The offer is subject to certain conditions including approval of Coty’s independent directors, JAB said.
WHAT'S NOTABLE: Coty in November replaced its CEO and chairman days after warning that its fiscal year performance could be hurt by supply chain issues. The company said Pierre Laubies would replace Camillo Pane as its CEO, its fourth CEO in as many years. Chairman Bart Becht also relinquished the role to fellow director Peter Harf. Both Harf and Becht run JAB. The company later added Pierre-Andre Terisse as CFO, Gianni Pieraccioni as COO, Consumer Beauty, as well as Luc Volatier as chief global supply officer.
Last week, Coty reported better than expected results for its second quarter and CEO Pierre Laubies said he was "confident" in returning Coty to a "path of sustainable growth." Following the report, JPMorgan analyst Andrea Teixeira raised her price target for Coty to $10 and said she found "renewed energy from new management encouraging," but pointed out there there were "no major financial strings or timing attached to the turnaround at this point."
PRICE ACTION: In morning trading, shares of Coty are up 13.5% to $10.98.