Coty Shareholders Raise $1 Billion in Mid-Priced IPO

Coty Inc., maker of perfumes endorsed by Beyonce and Heidi Klum, raised about $1 billion on behalf of existing holders in an initial public offering, pricing the shares at the midpoint of the proposed range.

Coty’s owners including the billionaire Reimann family sold 57.1 million shares for $17.50 each, according to a statement yesterday, after offering them for $16.50 to $18.50 apiece. The stock will start trading today, listed on the New York Stock Exchange under COTY.

The fragrance maker attracted buyers even as the Reimanns were set to maintain control over the company by allowing themselves 10 votes per share, compared with one vote for new shareholders. Buyers may benefit as Coty makes efforts to increase sales from developing markets and add skin-care products to its offering.

At the offering price, Coty has an enterprise value of about $8.6 billion including net debt, or about 11 times earnings before interest, taxes, depreciation and amortization in the 12 months through March 31, data compiled by Bloomberg show. Avon Products Inc. and Estee Lauder Cos., which Coty names as competitors, traded at enterprise values of about 14 times Ebitda during the same period, as of the close on June 11, the day before the offering.

Joh. A. Benckiser, the Reimanns’ Luxembourg-based investment arm, planned to retain an 85 percent voting stake while paring its equity holding to about 70 percent, filings show.

TJoy Acquisition

In fiscal 2012, more than half of Coty’s $4.61 billion in sales came from fragrances, 31 percent from color cosmetics and 16 percent from skin and body care, filings show. Coty agreed to pay $400 million for Chinese skin-care company TJoy Holdings Ltd. in December 2010 to gain access to its distribution channels.

Avon, the door-to-door cosmetics retailer, last year rebuffed a $10 billion takeover offer by Coty that would have provided a global sales network.

Berkshire Partners LLC, which has no relation to Warren Buffett’s Berkshire Hathaway Inc., and Rhone Capital LLC also planned to sell stock in the IPO.

New York-based Coty was founded in 1904 in Paris by Corsican-born Francois Coty. The company owns the color cosmetics brand OPI and has a licensing agreement to sell the Adidas line of skin-care products.

Bank of America Corp., JPMorgan Chase & Co. and Morgan Stanley led the sale.