Coty Inc (COTY)

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$COTY P&G offer in beauty split oversubscribed

Demand has exceeded supply in Procter & Gamble's tender offer to swap P&G shares for an eventual stake in New York beauty company Coty.

The disclosure made Friday means P&G will be able to complete its split off from 41 beauty brands without spinning off any ownership to P&G shareholders that didn't participate in the stock swap.

To execute the split off, P&G needed shareholders to tender almost 105 million shares of P&G stock. Instead, P&G shareholders offered to tender more than 691 million shares.

P&G will give small investors, tendering a total of nearly 1.5 million shares in odd-lots (less than 100 shares apiece), their full requested orders. Remaining shareholders will get roughly 15 percent of their order filled.

A final proration will be determined on Tuesday at 5 p.m. P&G shareholders participating in the deal have agreed to swap 1 share of P&G stock for 3.9 shares of stock that will quickly convert into shares of Coty, which makes Rimmel makeup and Calvin Klein perfume.

After the split off occurs, shareholders of the new entity, Galleria Co. will see the new company merge immediately with Coty. The merger is expected to happen next week. Participating P&G shareholders will collectively own 54 percent of the new super-sized Coty, which will have 746 million shares outstanding and a market capitalization of about $19 billion.

Coty will acquire eight P&G factories, 10,000 new workers and a raft of household names. P&G brands in the deal include: CoverGirl and Max Factor makeup, Wella and Clairol hair color and licensed fragrances Hugo Boss, Lacoste and Gucci.

With the closing of the beauty divestiture, P&G will complete its massive brand divestiture announced two years ago aimed at paring 100 noncore labels. When the deal is done, P&G executives have promised their company will be smaller, easier-to-run and poised to resume growing sales and profits.

The completed tender offer will also have functioned as a massive share repurchase with P&G shrinking its outstanding shares by about 4 percent – enhancing the earnings per share and value of remaining shares.


http://www.cincinnati.com/story/money/2016/09/30/pg-offer-beauty-split-oversubscribed/91317762/
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