The News: 22 year old reality TV star and beauty entrepreneur Kylie Jenner has just succeeded in selling 51% of her company, Kylie Cosmetics, to beauty company Coty, for a cool $600 million! Not bad for a 4 year old company that sold $177 million worth of cosmetics (makeup) in the last 12 months! This means that Coty thinks that her beauty business is worth about $1.2 billion, or that the valuation of Kylie’s beauty business is $1.2 billion!
Why would Coty want to buy such a large stake in Kylie Cosmetics and Kylie Skin? Coty owns makeup brands CoverGirl and Sally Hansen, was looking for a way to get younger people to buy its products. Kylie has a whopping 22.4 million followers on Instagram, a number that some people estimate increases by 7,000 followers a day! Forbes magazine reports that she has close to 270 million followers across all social media platforms. She is able to influence the buying decisions of many young women across the globe! Coty gets access to this base of people through its purchase of such a large stake of Kylie’s beauty business.
What does Kylie get from this deal? She gets to take home a profit! The money that she earned while modelling is what she used to start her business four years ago. The value of that investment has increased, and she is able to take some ‘off the table’, while still retaining a major stake in her company. She will still come up with new product ideas and work on the creative aspects of the brand.
Sounds like a win-win!
Written by: Sunaina Murthy