• Coty Inc. (NYSE:COTY) sells its 25.8% stake in Wella to KKR & Co. Inc. for $750 million in upfront cash, aiming to focus on its core beauty and fragrance businesses.
• The sale is expected to reduce Coty's net leverage to approximately three times by the end of 2025, enhancing financial flexibility.
• Despite a downgrade by Santander to a Neutral grade, Coty's strategic divestiture and focus on core operations signal a positive outlook for the company's financial health.

Coty Inc. (NYSE:COTY) is a global beauty company known for its wide range of cosmetics, skincare, and fragrance products. Recently, Santander downgraded Coty from its previous rating to a Neutral grade, with the stock price at $3.14. This downgrade comes amidst significant strategic changes within the company.

Coty has announced the sale of its remaining 25.8% stake in Wella to KKR & Co. Inc. for $750 million in upfront cash. This transaction is part of Coty's strategy to focus on its core beauty and fragrance businesses. The sale is expected to provide Coty with financial flexibility, allowing the company to reduce both short- and long-term debt.

The sale to KKR also includes Coty receiving 45% of any future sale or IPO proceeds of Wella. This strategic move is anticipated to lower Coty's net leverage to approximately three times by the end of 2025. Coty's CFO, Laurent Mercier, emphasized the value of the partnership with KKR, highlighting Wella's growth and the benefits of monetizing Coty's stake.

Following the announcement of the Wella stake sale, Coty's stock experienced an increase. Despite the downgrade by Santander, the company's strategic focus on streamlining operations and strengthening its financial position is evident. Coty's market capitalization is approximately $2.74 billion, with a trading volume of 7,709,091 shares on the NYSE.