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BUSINESS COMBINATIONS, ASSET ACQUISITIONS AND DIVESTITURES | 9 Months Ended
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Mar. 31, 2021
Business Combinations [Abstract] |
BUSINESS COMBINATIONS, ASSET ACQUISITIONS AND DIVESTITURES | BUSINESS COMBINATIONS, ASSET ACQUISITIONS AND DIVESTITURES Business Combinations and Asset Acquisitions KKW Beauty Business Transaction On January 4, 2021, the Company completed its purchase of 20% of the outstanding equity of KKW Holdings, LLC (“KKW Holdings”), pursuant to a Purchase Agreement entered into between the Company, KKW Holdings and other parties listed as signatories (the “KKW Purchase Agreement”). On the same date, as contemplated by the KKW Purchase Agreement, the Company entered into a collaboration agreement, pursuant to which, in exchange for a marketing fee and a license fee, it received the right and license to manufacture, advertise, promote, distribute and sell certain Kim Kardashian West products outside of the existing KKW Holdings scope of fragrances and cosmetics, and use certain intellectual property owned by or licensed to KKW Holdings in connection with the development, manufacture, labelling, packaging, advertising, display, distribution and sale of such products (the “KKW Collaboration Agreement”). Under the KKW Collaboration Agreement, products will be sold by the Company’s consolidated subsidiaries. Therefore, the related revenues generated and expenses incurred by such subsidiaries will be reported in the Company’s Condensed Consolidated Statements of Operations. The KKW Purchase Agreement also gives the Company an option to acquire, and the sellers the option to compel the Company to acquire, an additional 31% of the outstanding equity of KKW (the “KKW Call Option” and “KKW Put Option”, respectively). The seller’s ability to exercise the KKW Put Option is contingent upon the achievement of certain contractually defined targets. The KKW Call Option and KKW Put Option expire on the seventh anniversary of the KKW Collaboration Agreement. Future exercise of the KKW Call Option or KKW Put Option has been deemed by the Company to be remote. However, if exercise were to occur such exercise may result in a material cash outflow for the Company. The purchase consideration paid for the equity interest, the KKW Call Option and rights under the KKW Collaboration Agreement was $200.0 and was allocated as follows using a relative fair value approach at the acquisition date:
| Estimated fair value |  |  |  |  |  | Estimated useful life (in years)
KKW Collaboration Agreement | $ | 180.6 |  |  |  |  |  |  | 20
20% equity interest in KKW Holdings | 19.4 |  |  |  |  |  |  |
Total purchase consideration | $ | 200.0 |  |  |  |  |  |  |
The initial fair value of the KKW Collaboration Agreement and the Company’s 20% equity investment were estimated using an income approach. The Company accounts for its 20% investment in the equity of KKW Holdings under the equity method. The initial fair value of the KKW Collaboration Agreement is recognized within Other intangible assets, net and the Company’s equity investment in KKW Holdings is recognized within Equity investments, each within the Condensed Consolidated Balance Sheets. The fair value of the KKW Call Option was deemed to be de minimis. King Kylie Transaction On November 18, 2019, the Company entered into a purchase agreement (the “Purchase Agreement”) with King Kylie, LLC ("King Kylie"), a Delaware limited liability company, and the other parties listed as signatories to the Purchase Agreement (the “Seller Group Parties”), to build and further expand King Kylie’s brands globally. Pursuant to the Purchase Agreement, on January 6, 2020, the Company acquired 51% of the equity interests in King Kylie from the applicable Seller Group Parties for a base purchase price of $600.0 in cash. In addition, as contemplated by the Purchase Agreement, the Company entered into a Collaboration Agreement, pursuant to which, in exchange for a marketing fee and a license fee, it received the right and license to manufacture, advertise, promote, distribute and sell certain products of King Kylie and use certain intellectual property owned by or licensed to King Kylie in connection with the development, manufacture, labelling, packaging, advertising, display, distribution and sale of such products. The Company has finalized the valuation of assets acquired and liabilities assumed for the King Kylie transaction. The following table summarizes the estimated allocation of the purchase price to the net assets as of the January 6, 2020 acquisition date:
| Estimated fair value (a) |  | Measurement period adjustments (b) |  | Estimated fair value as adjusted |  | Estimated useful life (in years)
Cash and cash equivalents | $ | 7.8 |  |  | $ | — |  |  | $ | 7.8 |  |  |
Receivables | 1.0 |  |  | — |  |  | 1.0 |  |  |
Inventories | 2.5 |  |  | — |  |  | 2.5 |  |  |
Property, plant and equipment | 3.6 |  |  | — |  |  | 3.6 |  |  |
Collaboration agreement | 369.0 |  |  | — |  |  | 369.0 |  |  | 20
License agreement | 280.0 |  |  | — |  |  | 280.0 |  |  | 20
Customer relationships | 27.0 |  |  | — |  |  | 27.0 |  |  | 1.5
Goodwill | 128.6 |  |  | — |  |  | 128.6 |  |  | Indefinite
Net other liabilities | (6.6) |  |  | — |  |  | (6.6) |  |  |
Total value | $ | 812.9 |  |  | $ | — |  |  | $ | 812.9 |  |  |
Noncontrolling interest | 212.9 |  |  |  |  | 212.9 |  |
Total purchase price | $ | 600.0 |  |  |  |  | $ | 600.0 |  |  |
(a) As previously reported in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020. (b) The Company recorded no measurement period adjustments in fiscal 2021, other than allocating the goodwill as noted below. Goodwill is not expected to be deductible for tax purposes. The goodwill is attributable to expected synergies resulting from integrating King Kylie’s products into the Company’s existing manufacturing and sales channels. Goodwill of $66.6, $35.9 and $26.1 is allocated to the Americas, EMEA, and Asia Pacific segments, respectively. The allocation of goodwill to segments was based on the relative fair values of expected future cash flows. The fair value of the noncontrolling interest was estimated using the income approach applied to the projected cash flows of King Kylie. As King Kylie is a private company, the fair value measurement was based on significant inputs that are not observable in the market and thus, represent a Level 3 measurement. Business Divestitures Wella Business On November 30, 2020, the Company completed the strategic transaction with KKR for the sale of a majority stake in the Wella Business (see Note 3—Discontinued Operations). Following the sale, Coty deconsolidated the Wella Business as KKR owns approximately 60% of the separately managed business, and the Company owns the remaining 40%. Initial cash proceeds received for the sale of the 60% stake in Wella were $2,451.7 (less cash disposed of $65.5, resulted in net cash proceeds of $2,386.2). Coty utilized $2,015.5 of the net proceeds to pay down its Term Loans A and B on a pro rata basis and reserved $500.0 for reinvestment in the Company's business (see Note 12—Debt). During the three months ended March 31, 2021, the Company recorded purchase price and working capital adjustments resulting in an incremental loss on sale related to the Wella Business of $27.5. Of the purchase price adjustments reflected during the three months ended March 31, 2021, $12.1 was settled in cash during the period. Additionally, as contemplated in the Sale and Purchase Agreement (as amended) relating to the sale of the Wella Business (the “Wella SPA”), the purchase consideration is subject to further adjustments for other working capital and contractually specified items. As a result of the sale of the majority interest in Wella, the Company determined that it no longer had a controlling interest in the Wella Business. The Company, therefore, deconsolidated its ownership of the Wella assets and liabilities and no longer reported the assets and liabilities of Wella in its Condensed Consolidated Balance Sheet as of March 31, 2021. The operations of Wella were consolidated in the results of the Company through the date of sale. The Company accounted for its 40% stake in the Wella Business under the fair value option (see Note 9—Equity Investments). Younique On August 27, 2019, the Company entered into a contribution and redemption agreement to transfer all of its membership interest in Foundation, which held the net assets of Younique, to an existing noncontrolling interest holder. On September 16, 2019 (the “Closing Date”), the Company completed the sale of all of its membership interest in Foundation. Consideration received at the Closing Date consisted of $50.0 cash and a secured promissory note with a face value of $27.9, which has been paid. The initial estimate of the pre-tax gain of $84.5 was included in Gain on divestitures and sale of brand assets in the Condensed Consolidated Statements of Operations for the nine months ended March 31, 2020. During the fiscal year June 30, 2020, the Company recorded a final pre-tax gain of $111.5 resulting from the sale. The final pre-tax gain is included in (Gain) loss on divestitures and sale of brand assets in the Consolidated Statements of Operations for the fiscal year ended June 30, 2020. Younique’s operations are included within Other and its results of operations through the Closing Date are included in the Condensed Consolidated Statements of Operations for the nine months ended March 31, 2020.

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