CINCINNATI: Procter & Gamble employees and partners, including agencies and suppliers, working on the 43 brands sold to Coty are expected to transition to the beauty giant once the deal closes next year.
Until the $12.5 billion deal closes, which is expected to happen in the second half of 2016, P&G will go on with business as usual, said Paul Fox, corporate communications director at the CPG company.
Staffers who spend 50% or more of their time working on the hair and beauty brands are considered "in-scope" and will transfer to Coty when the deal wraps up, Fox said. After the sale closes, Coty will make any other decisions about former P&G employees and firms, such as agency conflicts, he explained.
Fox added that the deal is exciting for P&G because it will allow the company to focus on its core brands, categories, and strengths. It is also beneficial for the brands being sold, he said, because they’ll become part of a "pure play beauty company," and Coty will be on the path to becoming a leading global beauty corporation.
Erin Lash, senior equity analyst at Morningstar, said selling its hair and beauty brands will allow P&G to focus its personnel and financial resources on its core portfolio.
Before the company concentrates on marcomms efforts with its core brands, Lash said it has to make sure the products are resonating with consumers.
"One of the things that’s plagued P&G in the recent past is that their products haven’t been truly innovative, and consumers haven’t felt like they’re getting added value from the new products that P&G is bringing to market," she explained.
Once a product is "on trend with what consumers are looking for," the company can put its marketing muscle behind it, added Lash.
Lash noted that it’s too early to speculate on the potential marcomms changes that could take place at P&G once the brands are sold next year.
Coty will gain control over Wella, Clairol, and Max Factor, as well as Hugo Boss and Dolce & Gabbana fragrances, among others.
P&G will merge the 43 brands into Coty through a complex deal referred to as a "Reverse Morris Trust" structure, in which the CPG company will spin off the operations into a new entity. P&G’s shareholders will own a majority stake in the new organization.
Coty’s portfolio of mainstream brands includes Calvin Klein, Balenciaga, and Davidoff fragrances, as well as cosmetics such as Rimmel London and Astor.