By and  on May 23, 2005

NEW YORK — Coty Inc. chief executive officer Bernd Beetz is serious when he talks about grooming the privately held company to be the world's leading beauty firm.

And Beetz showed it on Friday when Coty acquired the marquee Calvin Klein fragrance by signing a deal to buy Unilever's global prestige fragrance business for $800 million, a move that some analysts said could catapult the company into the top five of global fragrance firms.

Beetz has bigger ideas. He intends to become "the world fragrance leader," and the Calvin Klein brand will play a major part. The Coty ceo said that he has strong European brands and that Klein will provide "the linchpin" of a global power because of its strong presence in markets around the world. Coty is expected to log annual sales of about $2 billion when its fiscal year ends June 30. With the addition of the acquired brands, which do more than $600 million in estimated volume, it is anticipated that Coty may reach total sales of $3 billion within the next two years.

The Unilever business brings a portfolio of designer fragrances — Calvin Klein, Cerruti, Vera Wang, Chloe and Lagerfeld. Each will become part of Lancaster Group Worldwide, the prestige division of Coty, which houses megawatt brands such as Jennifer Lopez, Marc Jacobs, Kenneth Cole and Nautica.

Coty is already the top player in mass-market fragrance, with hits such as Celine Dion, Mary-kateandashley, Adidas and Stetson. The acquisition will give Coty the critical mass in the prestige segment to match its strengths in mass, Beetz said. With a stronger lineup covering all distribution channels and extended geographic reach, Coty is poised to go after industry behemoths, namely L'Oreal, Estee Lauder and Procter & Gamble.

"In addition to making Coty a leading player in a highly fragmented industry, this acquisition will move us closer to our longer-term goal of being among the top five beauty companies in the world," Beetz said in a statement.

Under the terms of the deal, Coty will make deferred payments to Unilever based on the sales performance of the Calvin Klein fragrances over the next 10 years.

The stipulation, which Unilever said could generate $100 million or more, ensures the consumer goods company benefits from its previous investment in the brand, a Unilever spokesman said. Since 2003, Unilever has worked to freshen its fragrance offering, introducing scents such as Vera Wang for Men, CerrutiSi, and Calvin Klein Eternity Moment.

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