Coty executives are said to have huddled with bankers in recent days to discuss buying P&G’s divisions through a Reverse Morris Trust, a source said. Such a move would save P&G from paying capital gains taxes on the deal. Under such a move, P&G would sell just under a majority stake to Coty and let Coty run the combined operations. P&G tried a similar, tax-free sale of its Pringles brand recently but the deal with Diamond Foods collapsed.
For Coty Chairman Bart Becht, winning the P&G auction is a homecoming of sorts. Becht held a variety of marketing, sales and finance positions at P&G before becoming CEO of Reckitt Benckiser from 1995 to 2011.
Procter & Gamble announced a year ago that it would sell dozens of brands in order to focus on multibillion-dollar businesses such as Tide and Crest.