Beauty, Sephora, Dolce & Gabbana

Dolce & Gabbana’s fragrances are still up for grabs now that they aren’t included in Coty’s multibillion deal for Procter & Gamble’s beauty brands.

Dolce & Gabbana didn’t give consent for Coty to take over its fragrance license as part of the company’s planned $12.5 billion acquisition of 43 P&G beauty brands. Christina Aguilera Perfumes did not consent, either.

“The licensors of the Dolce & Gabbana and Christina Aguilera Perfumes licenses did not provide their consent within the specified timetable, and in accordance with the transaction agreement and in the interest of staying on track with the transaction, it was agreed that these brands will not transfer upon completion of the merger,” Coty said. The company declined to comment beyond the press release. Coty will assume less debt because of the change to the deal.

Though they aren’t going to Coty, P&G’s plan to exit both the Dolce & Gabbana and Christina Aguilera Perfume fragrance licenses still stands. “We will work with the two license holders where consent was not granted on next steps given that we have made our intention to exit the fragrance business clear,” said P&G spokesman Paul Fox.

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Combined, Stifel analyst Mark S. Astrachan estimates the Dolce & Gabbana and Christina Aguilera Perfumes licenses make up about $580 million in sales and $90 million in earnings before interest, taxes, depreciation and amortization, with Dolce & Gabbana comprising about $500 million in sales and $80 million in EBITDA for those numbers. The change is a loss for Coty, but not one of incredible significance, according to Astrachan.

“We estimated its worth about three or four pennies in earnings, so I wouldn’t call it significant, but it’s clearly negative,” Astrachan said.

“We also think the risk was somewhat understood, as Coty mentioned the possibility of a large license not transferring on the September quarter earnings call in early November,” Astrachan noted. “It is also likely modestly accretive to sales growth given we understand the D&G license was not growing.” Dolce & Gabbana did not return a request for comment.

Still, the Dolce & Gabbana fragrance license was one of the largest in the transaction, though Coty will still add fragrance licenses from Hugo Boss, Gucci, Lacoste, Bruno Banani, Escada, Mexx, James Bond, Gabriela Sabatini, Stella McCartney and Alexander McQueen.

The merger, which now includes 41 brands, is on track to close in the latter half of 2016. Coty plans to organize itself into three segments: the Coty Luxury Division, which will house prestige fragrance and skin-care lines; Coty Consumer Beauty Division, which will consist of color cosmetics, retail hair coloring and styling products and mass-market body care, and Coty Professional Beauty, a dedicated operation for servicing hair and nail salon owners.

The company is also in the middle of a $1 billion acquisition of Hypermarcas’ beauty portfolio, which includes Brazilian hair care, hair color, skin care, men’s and nail lines. Announced in November, that transaction is expected to close by the end of March. In October, Coty said it would also buy digital marketing firm Beamly.

The P&G deal now includes 41 brands. In addition to the 10 fragrance licenses, Coty is set to add: Wella Professionals (and sub-brands), Sebastian Professional, Clairol Professional, Sassoon Professional, Nioxin, SP, Koleston, Soft Color, Color Charm, Wellaton, Natural Instincts, Nice ‘n Easy, VS Salonist, VS ProSeries Color, Londa/Kadus, Miss Clairol, L’Image, Bellady, Blondor, Welloxon, Shockwave, New Wave, Design, Silvikrin, Wellaflex, Forte, Wella Styling, Wella Trend, Balsam Color, Max Factor and Cover Girl.

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