Coty Inc. singlehandedly changed the landscape of the beauty industry on Thursday with a $12.5 billion deal to absorb a sizable chunk of Procter & Gamble Co.’s business in the sector.

Coty has inked a definitive agreement to merge 43 of Procter & Gamble’s beauty brands in a Reverse Morris Trust. In one fell swoop, the deal will catapult Coty from the 12th largest global beauty company in the world to the fifth spot, within shouting distance of the Estée Lauder Cos. Inc., according to WWD’s annual ranking of the top 100 beauty firms.

“It’s very significant,” Bart Becht, Coty’s chairman and interim chief executive officer, told WWD on Thursday about the merger. “It’s transformational clearly because we will be doubling the business. We are right now about a $4.5 billion business. We’ll go to roughly a $10 billion business. We become one of the largest cosmetics players in the world, behind L’Oréal and Estée Lauder.”

In Becht’s view, the deal establishes Coty “as a pure play global leader and challenger in the beauty industry.” As for what Coty will look like once the deal is completed, Becht said the company will hold the number-one position in fragrance, number two in salon professional and number three in color cosmetics.

The deal not only doubles sales but also management manpower, with 10,000 former P&G employees expected to cross over to Coty and join its existing 8,500 person staff.

The P&G bundle of brands, which generated revenues of about $5.9 billion is fiscal 2014, extends Coty’s reach to the salon professional segment and retail hair color, and bolsters its presence in fragrance and color cosmetics by adding brands such as Wella Professionals, the Cover Girl and Max Factor color cosmetics brands, as well as fragrance licenses Hugo Boss, Dolce & Gabbana and Gucci.

The deal also further shifts Coty’s reliance away from fragrance, with that category now accounting for 44 percent of sales (down from the current 51 percent), color cosmetics representing 24 percent of revenues (down from 30 percent), skin and body accounting for 8 percent (down from 29 percent) and hair color making up 24 percent of sales.

The $12.5 billion deal is a combination of $9.6 billion in equity, as well as about $2.9 billion of assumed debt. As part of the transaction, Coty will refinance its existing debt.

Following the transaction, which is expected to close in the second half of 2016, P&G shareholders will still own 52 percent of the new entity that will control the brands, which will be called RMT Brands, while Coty shareholders will own 48 percent. RMT Brands will be reported as discontinued operations by P&G, the company said.

But while Wall Street seemed to like the fact that P&G was getting rid of more brands — with the group’s shares down 0.4 percent to $80.66 — it seemed more wary of its impact of Coty, whose shares dropped 4.7 percent to close at $30.04.

The move marks perhaps the most transformational deal since P&G first jumped into the beauty business in 1985 with the acquisition of Richardson Vicks, which included Pantene, Olay and Vidal Sassoon. P&G chairman, president and ceo A.G. Lafley later served as the architect of the group’s current beauty business, spending $69 billion on acquisitions — including the $57 billion purchase of Gillette — to amass what at one point was a $23 billion business and was second to only L’Oréal. Lafley, who returned to P&G in 2013, is now dismantling the very business that he erected during his first tour as ceo.

Unilever, meanwhile, is bent on filling the power vacuum left by P&G with a spate of recent acquisitions, including Dermalogica, Murad, Ren and Kate Somerville.

P&G maintains it is not walking away from beauty, though.

During P&G’s call with Wall Street analysts on Thursday morning, the firm’s chief financial officer Jon Moeller said, “Beauty and personal care remain a key pillar in this portfolio. We remain committed to winning in hair care, skin care and personal care. These are categories and brands where we understand consumer needs and wants.”

P&G is keeping a number of its marquee brands, including Olay and Pantene, along with SK-II.

Also during the call, Moeller said the deal with Coty nearly completes P&G’s previously revealed plans to overhaul its portfolio.

Moeller said, “With this transaction we will have substantially completed the portfolio reshaping that we announced less than one year ago.” He added that 93 out of about 100 brands will have been sold, discontinued or consolidated, as part of P&G’s plan to drastically whittle down its portfolio.

“This represents a significant step forward in the work to focus our portfolio on 10 categories and 65 brands that best leverage P&G’s core competencies,” stated Lafley. “These businesses and brands have historically grown faster and have been more profitable than the balance.”

During Coty’s investor call on Thursday morning, Becht, said he will oversee the management team, which he said will pull executives from both companies.

In the past, Coty has been criticized for a perceived thinness of its management structure and bench strength. When Brecht was asked where he would find the manpower to run so much new business, he said, “The Procter business comes with the teams that manage the business. Anybody who spends more than 50 percent of their time on beauty is coming with the business. That means the management teams, the marketing teams, the R&D, the go-to-market organization, manufacturing. So everything [that] is dedicated to this business comes with it.”

He added that it’s too early to comment on the location of the new entity.

The deal between the two firms seemed imminent in late June after Coty abruptly said its incoming ceo, Elio Leoni Sceti, would no longer join the company on July 1 as planned, and Becht would stay on as interim ceo. Many analysts saw the change as an indication that Becht was needed to oversee a sizable deal with P&G. Wall Street is quick to praise Becht, who they say proved his operational skills during his 16 years as ceo of Reckitt Benckiser. In that role, Becht oversaw the integration of Reckitt & Coleman with Benckiser and created a high-growth enterprise.

On Thursday, Becht said Coty has no immediate plans to find a successor for him as ceo. He noted that both P&G and Coty felt he should stay on to oversee such a sizable transaction, and that bringing in someone new was “not advisable.”

As for the structure of the deal, P&G stated, that the “tax-efficient nature of the $12.5 billion offer maximizes value for P&G shareholders and minimizes annual earnings dilution. The transaction will result in a significant one-time earnings gain that will be recorded at closing of the transaction. P&G currently estimates the one-time gain will be in the range of $5 billion to $7 billion depending on the final deal value at the time of closing.”

The group added, “The core earnings per share impact of lost RMT Brands profit is expected to be completely offset on an annualized basis following the closing of the transaction through a combination of shares retired via the deal structure and offsetting overhead costs that were previously absorbed by the RMT Brands,” P&G said.

The company added that it is also looking to “pay dividends and retire shares worth up to $70 billion over a four-year period from fiscal years 2016 to 2019 through a combination of shares eliminated via this RMT Brands transaction and the previously announced Duracell transaction, ongoing discretionary share repurchase and continuing its strong history of dividend payments.”

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