Coty Inc. agreed to buy the personal-care and beauty division of Brazil’s Hypermarcas SA for about $1 billion in cash, turning again to acquisitions to expand its burgeoning cosmetics line.
The New York-based company will use a combination of debt and cash on hand to pay for the transaction, according to a statement on Monday. The Hypermarcas beauty business generated $253.5 million in revenue last year with brands such as Risqué nail polish and Paixão skin-care products.
The move follows an agreement in July to acquire more than 40 Procter & Gamble Co. beauty brands, a $12.5 billion deal that’s poised to turn Coty into one of the world’s largest cosmetics companies. That transaction will be conducted as a Reverse Morris Trust, meaning P&G will spin or split off the business, which will then merge with a Coty subsidiary. It will add brands like CoverGirl and Max Factor to the Coty stable of products.
The Hypermarcas deal gives Coty a platform to sell its existing lineup in Brazil, as well as the products it’s getting from P&G. The Hypermarcas transaction is slated to close by the end of March, while completion of the P&G deal is expected in the second half of 2016.
Coty gained 2.1 percent to $29.57 as of 10:19 a.m. in New York. Hypermarcas’s U.S.-traded shares were little changed at $4.60, while the company’s $323 million of dollar bonds due in 2021 rose 1.14 cent to 100.38 cents on the dollar.
Coty plans to give more details on the transaction when it reports quarterly results on Thursday.