BUSINESS COMBINATIONS

9 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

Brazilian Beauty Business Acquisition

On February 1, 2016, the Company completed the acquisition of 100% of the net assets of the Brazilian Beauty Business pursuant to the Shares and Trademarks Sale and Purchase Agreement (the “Share Purchase Agreement”) in order to further strengthen its position in the Brazilian beauty and personal care market. The total consideration was $899.0 which included cash consideration paid of R$3,539.0 million, the equivalent of $886.7, and an estimated additional payment of R$48.9 million, the equivalent of $12.3, for working capital adjustments expected to be paid in the fourth quarter of fiscal 2016. Management does not expect material changes to the estimated additional payment.

The Company estimated the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information currently available. The valuation of the assets and liabilities is subject to further analysis. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period in fiscal 2017. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized.

The following table summarizes the allocation of the preliminary purchase price to the net assets acquired in the Brazilian Beauty Business acquisition as of the February 1, 2016 acquisition date:

	Estimated fair value			Estimated useful life (in years)
Cash and cash equivalents	$	7.3
Inventories	50.2
Property, plant and equipment	96.7
Goodwill	496.8			Indefinite
Trademarks - indefinite	157.1			Indefinite
Trademarks - finite	10.0			5 - 15
Customer relationships	108.2			15 - 21
Product formulations	11.8			3
Other net working capital	4.7
Net other assets	2.3
Deferred tax liability, net	(46.1		)
Total purchase price	$	899.0

Goodwill is not deductible for tax purposes and is attributable to expected synergies resulting from market expansion for the Company’s existing and future products and avoidance of start-up capital expenditures for manufacturing facilities in Brazil. Goodwill of $243.3, $107.2, $84.9 and $61.4 is allocated to the Brazil Acquisition, Fragrances, Color Cosmetics, and Skin & Body Care segments, respectively. The allocation of goodwill to Fragrances, Color Cosmetics, and Skin & Body Care was based on the relative fair values of synergies of selling the Company’s existing brands through the acquired entity as well as the reduction in corporate and regional overhead allocated to these segments due to the addition of the Brazil Acquisition segment.

For both the three and nine months ended March 31, 2016, Net revenues and Net loss of the Brazilian Beauty Business included in the Company’s Condensed Consolidated Statements of Operations from the date of acquisition were $14.3 and $(4.4), respectively.

The Company recognized acquisition-related costs associated with the Brazilian Beauty Business acquisition of $1.7 and $2.3 for the three and nine months ended March 31, 2016, respectively, which are included in Acquisition-related costs in the Condensed Consolidated Statements of Operations.

Unaudited Pro Forma Information

The unaudited pro forma financial information in the table below summarizes the combined results of the Company and the Brazilian Beauty Business, as though the companies had been combined on July 1, 2014, and gives pro forma effect to events that are: (1) directly attributable to the transaction, (2) factually supportable, and (3) expected to have a continuing impact on the combined results. The pro forma adjustments include incremental amortization of intangible assets and increased depreciation of property, plant and equipment, based on preliminary values of each asset as well as costs related to financing the acquisition. The unaudited pro forma information also includes non-recurring acquisition-related costs and the amortization of the inventory step-up. Pro forma adjustments were tax-effected at the Company’s statutory rates. The pro forma information is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the acquisition had taken place on July 1, 2014 or that may occur in the future, and does not reflect future synergies, integration costs, or other such costs or savings. The pro forma information for three and nine months ended March 31, 2016 and 2015 is as follows:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2016			2015		2016		2015
Pro forma Net revenues	$	978.4		$	1,008.2	$	3,456.1	$	3,654.8
Pro forma Net (loss) income	(13.8		)	88.6		232.4		249.7
Pro forma Net (loss) income attributable to Coty Inc.	(20.2		)	81.9		209.9		227.4
Pro forma Net (loss) income attributable to Coty Inc. per common share
Basic	$	(0.06	)	$	0.24	$	0.60	$	0.65
Diluted	$	(0.06	)	$	0.23	$	0.59	$	0.63

Bourjois Acquisition

On April 1, 2015, the Company completed its purchase of 100% of the net assets of Bourjois from Chanel International B.V. (“CHANEL”) pursuant to the Stock Purchase Agreement, dated as of March 12, 2015, between the Company and CHANEL (the “Stock Purchase Agreement”) for a total purchase price of $376.8.

The Company has finalized the valuation of assets acquired and liabilities assumed for the Bourjois acquisition. For the three and nine months ended March 31, 2016, the Company did not recognize any measurement period adjustments and the measurement period for the Bourjois acquisition is now closed.

Goodwill is deductible for tax purposes and is attributable to expected synergies. Goodwill of $148.7, $11.1, and $35.0 was allocated to the Color Cosmetics, Skin & Body Care, and Fragrances segments, respectively.

The Company recognized acquisition-related costs associated with the Bourjois acquisition of $0.1 and $0.3 for the three months ended March 31, 2016 and 2015, respectively, and $1.2 and $1.9 for the nine months ended March 31, 2016 and 2015, respectively, which are included in Acquisition-related costs in the Condensed Consolidated Statements of Operations.