The difference between being one of the most recognized people in the world and being one of the most admired is worth about $180 million dollars, according to global beauty company Coty. Inc.
Coty COTY, +13.39% announced Monday a “strategic relationship” in which it paid $200 million for a 20% stake in reality TV star Kim Kardashian West’s beauty business, KKW Beauty. Under terms of the deal, Coty will be responsible for the “portfolio’s development” in skin care, haircare, personal care and nail products, and Kardashian West will “lead all creative efforts in terms of product and communication initiatives.”
The investment implies a $1 billion valuation for KKW Beauty.
Coty had disclosed earlier this month that it was in talks with Kardashian West regarding a possible collaboration. The deal comes less than a week after Kim’s husband Kanye West and Gap Inc. GPS, +3.64% announced a partnership in which Kanye will launch a Yeezy Gap collection next year.
Wells Fargo analyst Joe Lachky said he didn’t expect the deal to have a material impact on Coty’s financials in the near term, given the small ownership stake, but he said it could become “more material” over time as it includes a licensing agreement that puts Coty in charge of expanding the brand outside of cosmetics and fragrance.
Coty’s stock COTY, +13.39% soared 13% in afternoon trading. It has lost 58% year to date, while the S&P 500 index SPX, +1.46% has slipped 5.8%.
Meanwhile, the language in Coty’s release Monday was similar to that used in an investment the company closed six months ago with Kim’s younger half sister, Kylie Jenner.
In January, Coty said it closed on the “strategic partnership” announced in November 2019, in which Coty said it paid $600 million for a 51% stake in Kylie’s beauty business, Kylie Cosmetics.
That implies a $1.18 billion valuation for Kylie Cosmetics.
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At that time, Coty said it would be responsible for the “portfolio’s development,” while Jenner will “lead all creative efforts in terms of product and communications initiatives.”
There was a not-too-subtle difference, however, in the language Coty used to describe the sisters.
On Monday, Coty said about Kim:
“Karadashian West is one of the world’s most recognized personalities with 300 million followers across her personal and brand social media channels, as well as being an influential voice among beauty consumers globally,” Coty said in a statement.
In November, Coty said about Kylie:
“Kylie is one of the world’s most admired personalities with over 270 million followers across her personal and brand social media channels, as well as being one of the most influential voices among beauty consumers globally.”
Apparently, being admired is worth a lot more than being recognized.
