Form 4: JAB Holdings Adjusts Coty Derivative Positions

JAB Holdings B.V. reported the expiration of a 5 million share total return swap and the two-year extension of another 30 million share swap related to Coty Inc. stock.

Summary

• JAB Holdings B.V., Agnaten SE, and Lucresca SE, each identified as a 10% owner and director of Coty Inc., are the reporting persons.
• On August 29, 2025, a cash-settled total return swap with Credit Agricole Corporate and Investment Bank, representing a notional amount of 5,000,000 Coty Class A Common Stock shares, expired and terminated by cash-settlement.
• On September 2, 2025, JAB Holdings B.V. extended the term of existing long cash-settled total return swaps with Banco Santander, S.A., BNP Paribas, and Societe Generale by approximately two years for no additional consideration.
• This extension, involving a notional amount of 30,000,000 Coty Class A Common Stock shares, resulted in a deemed cancellation of the existing swap and entry into a new one, which is exempt from Sections 16(a) and 16(b) of the Securities Exchange Act of 1934.
• The reporting persons indirectly beneficially own 451,853,684 shares of Coty Class A Common Stock through JAB Beauty B.V.
• Reporting persons disclaim beneficial ownership of the reported securities, including the subject shares of the swaps, except to the extent of their pecuniary interest.

Sentiment

Score: 7

Explanation: The extension of a significant total return swap position by a major shareholder (JAB Holdings) for an additional two years, without additional consideration, suggests continued confidence in Coty Inc.'s long-term prospects. The expiration of a smaller swap is a minor rebalancing.

Positives

• The extension of a significant 30 million notional share total return swap by JAB Holdings B.V. indicates continued long-term interest and confidence in Coty Inc.'s performance by a major shareholder.
• The extension of the swap was for no additional consideration, suggesting favorable terms for JAB Holdings B.V.

Negatives

• The expiration of a 5 million notional share total return swap reduces JAB Holdings' derivative exposure to Coty, which could be interpreted as a slight rebalancing or reduction in bullish sentiment.

Risks

• The reporting persons disclaim beneficial ownership of the underlying shares for the swaps, meaning they do not have direct voting, investment, or dispositive control over these securities, which could limit their direct influence on company matters despite their significant economic interest.
• The nature of cash-settled total return swaps exposes the reporting person to the economic performance of the underlying shares without direct ownership, carrying counterparty risk with the banks involved.

Future Outlook

JAB Holdings B.V. has the right to terminate and close out the extended Long Swap during certain specified earlier periods. The extension of the 30 million share swap by two years indicates a continued long-term bullish view on Coty's stock performance from a major shareholder.

Management Comments

• "Each such Reporting Person disclaims beneficial ownership of such Shares, except to the extent of its pecuniary interests therein."
• "The Long Swaps do not give JAB Holdings B.V. direct or indirect voting, investment or dispositive control over any securities of the Company or require the Banks to acquire, hold, vote or dispose of any securities of the Company."
• "Each Reporting Person disclaims beneficial ownership of the securities reported herein, including the Subject Shares, except to the extent of its pecuniary interest therein, and this Form 4 shall not be deemed to be an admission that such Reporting Person is the beneficial owner of such securities for purposes of Section 16 or for any other purpose."

Industry Context

This filing reflects a significant shareholder's ongoing strategic positioning in a major beauty company. The use of total return swaps is a common financial instrument for large investors to gain economic exposure without direct ownership or voting rights, often for tax or regulatory reasons, allowing for flexible portfolio management within the consumer goods sector.

Comparison to Industry Standards

• The use of cash-settled total return swaps by large institutional investors like JAB Holdings is a standard practice for gaining economic exposure to a company's stock without triggering direct ownership implications or requiring physical share acquisition.
• JAB Holdings' continued significant indirect ownership (451.8 million shares) and substantial derivative exposure (30 million notional shares) in Coty Inc. positions it as a major strategic investor, comparable to other large private equity or holding companies that maintain significant stakes in publicly traded consumer goods companies.
• The extension of a large swap position for two years without additional consideration suggests a long-term view, similar to how other strategic investors might extend their investment horizons in core portfolio companies.

Stakeholder Impact

• Shareholders: The continued significant economic exposure of JAB Holdings, a major shareholder, through the extended swap, could be viewed positively as a sign of long-term commitment and confidence in Coty's value.

Next Steps

• JAB Holdings B.V. has the right to terminate and close out the extended Long Swap during certain specified earlier periods.

Key Dates

Recommendation

JAB Holdings, a significant 10% owner and director, has extended a substantial cash-settled total return swap position for two years without additional consideration. This indicates a continued long-term economic interest and confidence in Coty Inc. While a smaller swap expired, the overall message is one of sustained strategic positioning rather than a significant shift in sentiment, warranting a 'hold' recommendation for investors.

Keywords

Coty Inc., JAB Holdings, SEC Form 4, Beneficial Ownership, Total Return Swap, Derivative, Equity, 10% Owner, Insider Transaction, Shareholding, Corporate Governance