City Shares Rallying Amid Winning Auction To Acquire P&G's Beauty Assets For ~$12 Billion

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Coty Inc COTY won auctions to buy out three businesses from The Procter & Gamble Company PG after Monday’s market session, for a whopping $12 billion. Shares of Coty closed off at $26.05 after Monday’s close, and hastily soared $4.45 to $30.50 up until Tuesday’s pre-market session. Procter & Gamble shares closed off at $78.12 in Monday’s close and have risen $1.14 to $79.26 in Tuesday’s pre-market session.

Coty intends to acquire Procter & Gamble’s beauty assets, which may take up to two weeks to finalise. If the deal finalises, it will be considered the largest deal in cosmetics in a couple decades, and would turn Coty into a powerhouse in hair care, cosmetics, and perfume products.P&G will have to spin off the beauty assets into a serrated company, this company will then absorb Coty in a share deal.

Mark Astrachan of Stifel has rated Coty with a Buy rating alongside a targeted price of $28. Mark specified “simply put, should a deal resemble that described above it would be a homerun for Coty, more than doubling current sales and EBITDA and likely free cash
flow, resulting in significant cost savings and increasing Coty’s clout with
retailers, in our view.”

Shares of Coty have been soaring, up nearly 27 percent year-to-date. On the other hand, Procter & Gamble has declined nearly 15 percent year-to-date.

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