Hunt Valley-based Covergirl will be sold to Coty as part of Procter & Gamble Co.'s planned spinoff of 43 beauty brands in a $15 billion deal announced Thursday.
As part of the deal, Procter & Gamble is selling its salon professional hair care and color, retail hair color, cosmetics and fine fragrance businesses, and certain hair styling brands.
Brands included in the transaction include Miss Clairol, Max Factor, Sebastian Professional, Sassoon Professional, Natural Instincts and Nice & Easy.
A Procter & Gamble spokesman said Thursday he would not expect Covergirl's Hunt Valley operation to move or shrink once the sale is finalized, though such decisions would be made by Coty. The deal is expected to be finalized in the second half of next year.
About 900 people work in Covergirl offices, a manufacturing plant and a distribution center in Hunt Valley.
"We do not anticipate any changes," Proctor & Gamble spokesman Paul Fox said. "Coty has expressed significant interest in all of our people. It's one of the reasons they are acquiring Covergirl and Max Factor and the cosmetics lines, and we fully expect the employees that are involved in those businesses to transfer to Coty when we close the deal."
Until then, Fox said, "It is business as usual for us and for Hunt Valley."
Though Bart Becht, chairman and interim CEO of Coty, noted in a morning conference call that little overlap exists between the two companies, a company spokesman said it is too early to discuss specific operations.
"At this time we cannot comment on specific plans for particular facilities," Coty spokesman Tom Johnson said.
The company said in a news release that it does expect to achieve cost savings.
"We are hopeful that the new owners will see the value of continuing a successful Hunt Valley manufacturing operation for these iconic cosmetic lines," said Will Anderson, director of the Baltimore County Department of Economic and Workforce Development. "The people at P&G's Hunt Valley plant are talented, committed, experienced workers."
Anderson said the plant benefits from a strong distribution network via interstate, rail and port and from a long standing supplier network in the state.
Reports circulated last month that Coty might buy several brands from consumer products maker P&G, which announced in August that it was looking to shed many of its brands.
Coty sells fragrances, cosmetics and skin and body care products under brand names including Calvin Klein, Marc Jacobs, OPI and Sally Hansen.
The New York company said that the transaction would boost its product offerings and expand its global reach, particularly in markets like Brazil and Japan, creating one of the world's largest beauty companies with annual sales of more than $10 billion.
The addition of Covergirl and Max Factor would allow the company to "significantly enhance its position in color cosmetics," the company said.
Corporate spinoffs have become common as companies aim to become more streamlined and recapture value of core brands.
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As companies expand and add brands, the true value of an individual brand can become lost in the mix, said Karyl Leggio, a finance professor at Loyola University Maryland. Leggio said the Covergirl division is viewed as well-run but no longer fits with P&G's portfolio.
Covergirl started as the Noxzema Chemical Co. in 1961 in Hampden, selling Cover Girl medicated face foundation. The company moved in 1966 to Hunt Valley, where it expanded into eye makeup, lipstick and nail polish. P&G bought the company, then called Noxell, and Covergirl Cosmetics in 1989, bringing the Max Factor cosmetics line to the plant in the early 1990s.
The final details of the deal aren't worked out yet, but P&G wants it structured as a Reverse Morris Trust, under which the beauty business would be separated from P&G and merged with a Coty subsidiary. P&G shareholders would receive 52 percent of outstanding stock in the combined company, with Coty shareholders getting 48 percent.
Procter & Gamble puts the deal's value at about $15 billion. That includes stock valued at about $13.1 billion and debt ranging between $1.9 billion and $3.9 billion.
Cincinnati-based P&G expects a one-time gain of $5 billion to $7 billion. Coty anticipates about $550 million in cost savings on an annual basis over the next three years and approximately $500 million in one-time costs.
After the transaction closes, Coty anticipates raising its annual dividend to 50 cents a share.
The Associated Press contributed to this report.