Frédéric Fekkai is looking to take advantage of the turmoil of restructuring at the Procter & Gamble Co. and buy back his luxe hair-care brand.
P&G bought the Fekkai brand just before the recession, but the business hasn’t developed as hoped under the umbrella of the consumer products giant, which is now rethinking its place in beauty overall.
It is not clear how far along Fekkai is in the process and he did not return queries Monday afternoon.
But if the two sides did come to terms, it’s expected that P&G would be selling the brand for much less than the $400 million it was reported to have spent to buy it from Catterton Partners in 2008. P&G kept Fekkai on as brand architect overseeing the overall image and the creative efforts.
There’s more than enough change at P&G to open up an opportunity for Fekkai to buy back the business and take a second go behind the wheel.
A.G. Lafley, P&G’s chairman and chief executive officer, said last year that the company would cut 80 to 90 of its 160 brands, slimming down to focus on its more profitable ones. Thirty-five of those brands — including battery giant Duracell — have already been cut and sources said the company is weighing a potential initial public offering of its beauty business, which includes brands such as Olay, SK-II and Wella.
That could add some urgency to P&G’s efforts to trim down in the area.
Sources said the company has been shopping around its beauty brands without much success; Goldman Sachs was said to have been hired to explore the sale of at least the Wella business.
A potential IPO could bring some buyers, particularly from the private equity world, off the sidelines as P&G demonstrates that it has options and is serious about getting out of beauty. “There’s definitely some gamesmanship going on,” said one financial source.
Another source said the possibility of an IPO could “lead one of the bigger guys to take a bite [and buy the portfolio] and do the cleaning up that P&G hasn’t been able to do.”
During the last fiscal year, ended June 30, P&G’s beauty business saw net sales fall 2 percent to $19.51 billion while earnings from continuing operations rose 11 percent to $2.74 billion.
A P&G spokesman declined to comment on the possibility of an IPO for the beauty arm or on Fekkai specifically. A potential IPO of the beauty division was reported by Bloomberg on Monday.
In recent years, analysts have nudged the company to consider a spin-off of beauty.
At the company’s annual meeting in October, one investor expressed the concerns of many and worried aloud that P&G might hold a “fire sale.” “You can sell off parts of an automobile and make money, [but] you don’t have a functioning automobile anymore,” the investor said.
Lafley said trimming down to core brands could help the company build value.
He said P&G endured because “we have been willing to change the mix of business and brands and product lines that we’re in to follow the changing needs and wants of our consumers. That’s the real intent here. This is not a fire sale.”
He added, “This is not about being big. It is about being better, best. We’ll create a faster-growing, more profitable company that is far simpler to manage.”
Wall Street took the potential IPO of the group’s beauty business in stride and drove shares up 2.1 percent to $83.56.