Coty Inc., the seller of perfumes by Sarah Jessica Parker and Vera Wang, agreed to buy nail-care company OPI Products Inc., gaining a portfolio with more than 200 shades and expanding into professional salons.
The companies didn’t disclose the terms of the deal in a statement today. New York-based Coty is paying about $1 billion in cash, two people with knowledge of the matter said yesterday.
OPI, founded almost three decades ago by Chief Executive Officer George Schaeffer, sells polish used in nail salons, hand- and foot-care products and body lotion. Coty has bolstered its cosmetics business with acquisitions this month, agreeing to buy skin-care maker Philosophy and Dr. Scheller Cosmetics AG.
The acquisition of Phoenix-based Philosophy forms part of a strategy to increase sales of luxury skincare and fragrances, particularly in the U.S. and Asia. Coty is aiming to almost double sales to about $7 billion by 2015. The company reported revenue of about $3.6 billion in the financial year ended in June. Its luxury business has revenue of about $1.7 billion, about half of which comes from Europe, according to Michele Scannavini, head of the prestige unit.
Moelis & Co. served as financial adviser to Coty in the current deal, while Lazard Ltd. advised North Hollywood, California-based OPI. Gibson Dunn & Crutcher LLP provided legal counsel to Coty and Skadden Arps Slate Meagher & Flom did the same for OPI.
Coty announced on Nov. 23 that it will buy Philosophy from private-equity firm Carlyle Group, without disclosing the terms. Less than two weeks before that, it agreed to purchase Dr. Scheller Cosmetics from Russia’s OAO Concern Kalina. Coty acquired Unilever Cosmetics International in 2005 for 632.6 million euros ($860.6 million).
OPI has annual sales of about $300 million and earnings before interest, taxes, depreciation and amortization of about $80 million, people familiar with the matter said last month. Coty distributes perfumes such as “Lovely” from Parker, star of “Sex and the City,” and “Princess” from designer Wang.
The acquisition would value OPI at 12.5 times its earnings before interest, taxes, depreciation and amortization. During the past five years, there have been 277 deals involving cosmetics companies worldwide, which sold for a median multiple of 13 times EBITDA, according to data compiled by Bloomberg.
This is at least the second acquisition of a nail-care company this year. In April, L’Oreal SA agreed to buy Essie Cosmetics to expand in the U.S. nail-color market. Terms weren’t disclosed.