Beauty conglomerate Coty (COTY.N) announced on Friday that it has sold its remaining 25.8% stake in hair care brand Wella to private equity firm KKR (KKR.N) for $750 million, while retaining rights to a portion of future proceeds from a potential sale or initial public offering (IPO).

Under the deal, Coty is entitled to 45% of proceeds from any future sale or IPO of Wella after KKR achieves its preferred return. Coty plans to use the upfront cash primarily to reduce debt, strengthening its financial position.

Strategic Portfolio Streamlining

The transaction completes Coty’s multi-year program, initiated in 2020, to streamline its brand portfolio and unlock the full value of Wella. Earlier this year, Coty launched a broader strategic review of its beauty business, considering the potential sale of additional brands, including Rimmel and CoverGirl, as the company focuses on its fragrance segment amid ongoing weak demand for color cosmetics.

Coty, founded in 1904 in Paris, licenses fragrances for top luxury brands such as Gucci, Chloe, and Burberry. The company currently has a market capitalization of approximately $2.8 billion. Shares of Coty have lost nearly 50% of their value so far in 2025, reflecting the challenges in the cosmetics sector.

Historical Context

Coty originally acquired Wella in 2015 as part of a $12.5 billion purchase of Procter & Gamble’s beauty business, which significantly expanded its portfolio in hair care and professional beauty products.

With the KKR deal, Coty has now fully monetized its Wella holdings while preserving a stake in potential future upside, a move analysts describe as a balanced strategy to reduce debt and maintain exposure to growth opportunities in professional hair care.