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Procter & Gamble has taken the next step in selling 41 of its beauty brands to Coty Inc.

The company commenced an exchange offer to separate the specialty beauty brands, it said on Thursday. The sale is structured as a Reverse Morris Trust transaction under which P&G will spin off the specialty beauty brands to a subsidiary called Galleria Co. After the exchange offer is complete, Galleria will merge with a Coty subsidiary.

The exchange gives P&G shareholders the option to exchange their shares for shares of Galleria. Those shares will convert into the right to receive one share of class A common stock in Coty upon completion of the deal. P&G shareholders who tender their shares are expected to receive about $1.075 in Galleria stock for every $1 in P&G stock tendered, the company said. The exchange offer expires at midnight on Sept. 29.

After all aspects of the merger are complete, stock from the exchange from P&G shareholders is expected to make up about 55 percent of Coty’s class A common shares. Coty’s acquisition of the beauty brands is anticipated to close in October.

As P&G focuses on realigning its product portfolio into 10 core categories, Coty is taking over much of P&G’s existing beauty business. P&G is holding on to certain beauty brands, including Pantene, SK-II and Olay.

For Coty, which is buying the fragrance licenses for Hugo Boss, Gucci, Lacoste, Bruno Banani, Escada, Mexx, James Bond, Gabriela Sabatini, Stella McCartney and Alexander McQueen, as well as Wella Professionals, Clairol Professional, Max Factor and Cover Girl, the deal is transformational. As a result, the company is reorganizing into three divisions: Coty Luxury, which will house prestige fragrance and skin care; Coty Consumer Beauty, made up of color cosmetics, retail hair coloring and styling products and mass-market body care, and Coty Professional Beauty, which will serve hair and nail salon owners. After the deal closes, interim chief executive officer and chairman Bart Becht will hand over the ceo post to Camillo Pane.

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