US beauty and fragrance company Coty (NYSE:COTY) Inc. launched an offering of 33 million shares on Tuesday, as part of its plan to list on Euronext Paris. This move aims to tap into the European market's deep understanding of the luxury goods industry and is expected to increase the appeal of the French bourse as a global hub for luxury stocks. The stock offering is valued at about $389 million based on Coty's closing price in New York on Monday.
Coty has applied to list its Class A common stock on the professional segment of Euronext. Investors will have the option to purchase Coty’s Paris-listed stock in euros or the New York Stock Exchange-listed stock in dollars. However, Coty's US shares dropped 3.3% in premarket trading on Tuesday.
The details of this proposed Paris listing were revealed last week, with BNP Paribas (OTC:BNPQY) SA, Credit Agricole (OTC:CRARY) SA, Citigroup Inc (NYSE:C), and Banco Santander SA (NYSE:SAN) serving as joint global coordinators of the offering. Coty plans to price the offering before the US market opens on Thursday, September 28, following a call with prospective investors.
The company intends to primarily use the proceeds from this offering to retire debt. Funds may also be directed towards general corporate purposes including strategic investments in its business, working capital, and capital expenditures.
Coty's decision to list in Paris is not only due to the presence of analysts and comparables but also because of Euronext NV’s liquidity pool and an extremely deep order book, according to Stephane Boujnah, CEO of the exchange operator.
Coty has historic ties with France, having been founded in Paris in 1904. The cosmetics company had announced in May that it was considering listing in Paris — "the historic home of beauty" — to tap a fresh pool of capital.
In September, Coty raised its sales outlook for the year, citing robust demand for higher-end fragrances like the recently launched "Burberry Goddess". Its brands include Covergirl, Kylie Cosmetics, and Gucci and Hugo Boss fragrances. The company also plans to manage its outstanding share count by settling one or more outstanding total return swaps over the next six months, in an amount of up to 27 million shares.
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