Reports circulated in the market late Thursday that Coty Inc. has signed a deal to buy Del Laboratories for an estimated $800 million. It is expected that the two firms could announce the acquisition as early as today.
Del Labs, which is owned by the New York private equity firm Kelso & Co., is known in the beauty industry for its Sally Hansen nail care — the market leader — but its business also includes over-the-counter pharmaceuticals, such as the Orajel brand.
Industry sources anticipate that Coty will purchase both businesses and later shed the pharmaceuticals piece. They also expect Coty will move swiftly to consolidate Del Labs' Uniondale, N.Y., headquarters into the fragrance firm's Manhattan offices.
Industry watchers have long suspected that Coty's chief executive officer Bernd Beetz aims to take the $3.3 billion firm public, but said he would first need to round out its fragrance-heavy brand portfolio. This particular deal would pad Coty's beauty business significantly, given cosmetics — including Sally Hansen and NYC New York Color — account for about 80 percent, or $340.7 million, of Del Labs' 2006 net sales, which totaled $425.9 million. Coty is 100 percent owned by the Ludwigshafen, Germany-based Joh. A. Benckiser GmbH, a private holding company that also owns 15 percent of the London-based consumer products firm Reckitt Benckiser.
News of Coty's possible purchase of Del Labs was first reported by The Wall Street Journal last week.
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