Coty Inc., a maker of fragrances, nail polish and skin lotions, surged 19 percent on a report that it reached a $12 billion agreement with Procter & Gamble Co. to acquire beauty products.
The deal involves Coty taking control of P&G’s Wella hair-care unit and two beauty lines, the New York Post reported. Under the terms of the agreement, Coty would buy a little less than a majority stake while running the combined operations, allowing P&G to avoid paying capital gains tax on the deal, the newspaper said.
Coty rose to $31.08 in New York Tuesday, marking the biggest one-day gain since its initial public offering two years ago and sending the stock into record territory. P&G climbed 1.3 percent to $79.10.
The transaction would be the latest move by P&G Chief Executive Officer A.G. Lafley to streamline the world’s largest consumer-products company -- an effort that includes exiting as many as 100 slower-selling brands. Coty, meanwhile, is looking to shore up its skin-care business.
In shopping its beauty lineup, P&G approached a number of potential buyers, including Henkel AG and Unilever, people familiar with the matter have said. Henkel has since dropped out of the race to acquire the assets, according to one person with knowledge of the process.
Representatives for New York-based Coty and Cincinnati-based P&G declined to comment.