July 7 (Reuters) – Coty said on Tuesday it had agreed to transfer the Gucci Beauty license back to Kering in a deal worth about $400 million, about a year before the original license term was due to end.
Coty will continue to operate Gucci Beauty through at least June 30, 2027, before the license transfers back to Kering, the company said.
The company’s shares ticked up on Tuesday as investors welcomed the $400 million that Coty will get from the transfer, money that it needs to pay down debt and fund new investments.
The agreement follows Kering’s beauty deal with L’Oréal last year, which included rights to a long-term Gucci beauty license after Coty’s existing contract expires.
The deal follows months of discussions over an early handover.
In February, L’Oréal chief executive Nicolas Hieronimus said the French cosmetics group would welcome gaining access to the Gucci beauty license before its scheduled 2028 expiry and confirmed discussions were under way between Kering and Coty.
Industry analysts view the Gucci fragrance business as the crown jewel of Kering’s beauty portfolio because of its potential to replicate the rapid growth L’Oréal achieved with Saint Laurent fragrances.
The Gucci license has been one of Coty’s most valuable assets since the company acquired it through its purchase of Procter & Gamble’s beauty brands in 2016.
Coty said it plans to use the proceeds to reduce debt, invest in its core prestige fragrance and beauty brands and streamline its organizational structure.
The cosmetics company also agreed to sell Kering enough Gucci Beauty inventory to support the transition.
(Reporting by Sanskriti Shekhar in Bengaluru ; Editing by Tasim Zahid)
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