Procter and Gamble to merge beauty brands with Coty

Procter and Gamble has signed a definitive agreement to merge 43 of its beauty brands with Coty via a Reverse Morris Trust transaction.

The $12.5 billion (8.04 billion pounds) deal encompasses Procter and Gamble's global salon professional hair care and colour, retail hair colour, cosmetics and fine fragrance businesses, along with a number of hair styling brands.

Although a final decision has not been made on the form of the deal, the company expects to do a split-off or spin-off transaction. The details of the transaction will be finalised in the coming months and closed in the second half of 2016.

It is expected that the deal will deliver around $70 billion in terms of returns for shareholders between the 2016 and 2019 fiscal years.

AG Lafley, Procter and Gamble's chairman, president and chief executive officer, said: "The merger with Coty, a strategic acquirer, will provide an excellent new home for these businesses and brands, as well as for the talented people who are operating them."

The firm will announce its financial results for the fourth quarter of the 2014/15 business year at the end of this month.