On the cusp of a deal to acquire one of the hottest new names in makeup, directors of beleaguered beauty giant Coty Inc. had some unconventional concerns.
Will sales fall if the chief executive decides to have another child? Can a 22-year-old social-media star reliably stay out of trouble? What role will her mother play?
Last year, Coty was hatching a plan to pay $600 million for a controlling stake in the cosmetics startup founded by “Keeping Up with the Kardashians” star Kylie Jenner, a move aimed at reviving a beauty business dependent on drugstore staples like Cover Girl and Max Factor.
Coty directors ultimately decided Kylie Cosmetics’ metrics—$200 million in annual revenue with fewer than a dozen employees and virtually no ad spending—outweighed their worries. Also persuasive were reassurances from Ms. Jenner’s mother, Kris Jenner, who helped launch the company in 2015 and led negotiations.
A year after closing the deal, Kylie Cosmetics has both bolstered its new parent and dealt it some blows—though none that the company initially anticipated.