Coty Said to Be Near Deal to Buy OPI for as Much as $1 Billion
Coty Inc., the seller of perfumes by Sarah Jessica Parker and Vera Wang, is close to a deal to buy nail-care company OPI Products Inc. for as much as $1 billion, said two people with knowledge of the situation.
The two closely held companies are in exclusive talks and may reach an agreement as soon as this week, said the people, who asked not to be identified because the matter is private. OPI may sell for $900 million to $1 billion, one person said. A deal could still fall through in the final stages, or another company could make a bid.
"This branches them out into a different category," said Rommel Dionisio, a New York-based analyst for Wedbush Securities Inc. who covers competitor Estee Lauder Cos. "It’s further showing Coty’s emergence onto the scene as a major player."
Coty, which calls itself the world’s largest fragrance company, is the likeliest buyer for OPI, people familiar with the matter said last month. Private-equity firms Bain Capital LLC and Advent International Corp. were among the companies that also made bids, the people said.
Cysette Burset, a spokeswoman for Coty, didn’t immediately respond to a request for comment, nor did Harris Shepard, a representative for OPI.
Coty has previously used acquisitions to build its business, announcing Nov. 12 that it agreed to buy Dr. Scheller Cosmetics AG from Russia’s OAO Concern Kalina. Coty also purchased 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, the people said last month. The North Hollywood, California-based company is seeking 11 to 12 times its earnings for the sale, they said.
OPI sells polish used in nail salons, hand-and-foot care products and body lotion. President and Chief Executive Officer George Schaeffer founded the company in 1981, according to OPI’s website.
Coty distributes perfumes such as “Lovely” from actress Parker and “Princess” from designer Wang. The New York-based company also sells cosmetics and skin-care products.
A purchase of OPI would be 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 nail color market in the U.S. Terms weren’t disclosed.
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