US beauty giant Coty to swoop on £400m GHD

The American cosmetics giant which is home to brands including Wella, Katy Perry and Rimmer is close to sealing a £400m-plus takeover of GHD, the British hair products manufacturer.

Sky News has learnt that Coty (Frankfurt: A1WY6X - news) , which has just completed the $12.5bn purchase of Procter & Gamble (Swiss: PG-USD.SW - news) 's specialist beauty business, is in advanced talks to buy GHD.

Banking sources said that a deal could be announced as soon as this month.

If completed, the transaction will unite products bearing the names of one of Britain's most famous celebrity couples: the consumer beauty division of Coty's existing portfolio includes products bearing David Beckham's name, while his wife Victoria's fashion business has a tie-up with GHD.

The exact price that City intends to pay for GHD was unclear this weekend, although one unsuccessful bidder said it was likely to be well in excess of £400m.

GHD was put up for sale earlier this year by its owner, the private equity firm Lion Capital, with Rothschild hired to handle an auction.

A number of cross-border deals have been struck since the fall in sterling since June's EU referendum, allowing overseas bidders to take advantage of cheaper takeover targets, although it is unclear whether that has been a material factor for Coty.

The US-based cosmetics group, which is chaired by Bart Becht, the former chief executive of Reckitt Benckiser (Xetra: A0M1W6 - news) , is understood to have seen off competition for GHD from rival bidders CVC Capital Partners and Panasonic (Swiss: MAELI.SW - news) .

Coty's other brands include CoverGirl, Davidoff and Clairol, and following the acquisition of the P&G division it is now one of the world's largest beauty, cosmetics and fragrances groups.

GHD, whose name stands for Good Hair Day, has shown strong growth, with documents sent to prospective buyers disclosing that it made £33.7m in pre-tax profit in its 2015-16 financial year, on sales up 9.5% to £181.2m.

The company manufactures a wide range of straighteners, curling products and hairdryers, and is understood to boast a strong innovation pipeline, developed with the aid of new technologies.

It was founded in 2001 with a £15,000 investment from three entrepreneurs in Bradford, West Yorkshire, who bought the rights to a Korean-developed hair-straightening iron.

The company now has an alliance with Mrs Beckham's fashion business, and leans heavily on a range of celebrity endorsements to promote itself.

In the UK, GHD products are sold in upmarket outlets such as Harvey Nichols and Selfridges, with the company keen to expand its international reach by growing sales in countries such as Brazil, China, India and South Korea.

GHD has been run since 2014 by Anthony Davey, a former P&G executive.

The company's rival, Tangle Teezer, is also exploring a sale and is understood to be in exclusive talks with Inflexion Private Equity.

Lion Capital declined to comment, while Coty could not be reached for comment.