Procter & Gamble begins stock swap in Coty deal

9/1/2016

CINCINNATI -- Procter & Gamble announced Thursday its plans for stockholders to exchange its stock for shares in Coty, which has agreed to buy 41 beauty brands from P&G in a deal valued at $12.5 billion.


This represents the next step in the proposed tax-efficient Reverse Morris Trust transaction with Coty Inc. announced on July 9, 2015. In the proposed split-off transaction, P&G will transfer the assets and liabilities of P&G Specialty Beauty Brands, other than specified excluded brands, to Galleria Co., a wholly owned subsidiary of P&G created to facilitate the transaction. Following completion of the exchange offer, Galleria Co. will merge with a wholly owned subsidiary of Coty and become a wholly owned subsidiary of Coty.


The exchange offer announced Thursday provides P&G shareholders with the opportunity to exchange their shares of P&G common stock for shares of Galleria Co. common stock, which will convert into shares of Coty class A common stock upon completion of the merger. The exchange and the merger are expected to be tax-free to participating P&G shareholders for U.S. federal income tax purposes.


The exchange offer includes several key elements:




  • P&G is offering to exchange shares of Galleria Co. common stock for shares of P&G common stock that are validly tendered and not properly withdrawn. Procedures regarding how to tender and withdraw shares will be specified in the exchange offer materials distributed to P&G shareholders.


  • P&G shareholders have the opportunity to exchange all, some or none of their shares of P&G common stock for shares of Galleria Co. common stock, subject to proration if the exchange offer is oversubscribed. Each share of Galleria Co. common stock will automatically convert into the right to receive one share of Coty class A common stock upon completion of the merger, which is expected to occur as promptly as practicable following completion of the exchange offer.


  • Tendering P&G shareholders are expected to receive approximately $1.075 of Galleria Co. common stock for every $1.00 of P&G common stock tendered and accepted in the exchange offer, subject to an upper limit described below.


  • P&G expects to issue 409,726,299 shares of Galleria Co. common stock in the exchange offer. The number of shares of P&G common stock that will be accepted in the exchange offer will depend on the final exchange ratio and the number of shares of P&G common stock tendered and not properly withdrawn.


  • The exchange offer and withdrawal rights will expire at 12:00 midnight, Eastern Daylight (New York City) Time, on September 29, 2016, unless extended or terminated.


  • Galleria Co. common stock will not be delivered to participants in the exchange offer. Participants will instead receive shares of Coty class A common stock in connection with the merger. No trading market currently exists or will ever exist for shares of Galleria Co. common stock.


 


 


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