Coty Inc., a maker of fragrances, nail polish and skin lotions, surged as much as 19 percent on a report that it reached a $12 billion agreement with Procter & Gamble Co. to acquire beauty products that had been put up for sale.

The deal involves Coty taking control of P&G’s Wella hair-care unit and two beauty lines, the New York Post reported. Under the terms of the agreement, Coty would buy a little less than a majority stake while running the combined operations, allowing P&G to avoid paying capital gains tax on the deal, the newspaper said.

Coty rose as high as $31.09 after the report was published, marking the biggest intraday gain since its initial public offering two years ago and sending the stock into record territory. P&G climbed 0.8 percent to $78.73 as of 10:46 a.m. in New York.

The transaction would be the latest move by P&G chief executive A.G. Lafley to streamline the world’s largest consumer-products company -- an effort that includes exiting as many as 100 slower-selling brands. Coty, meanwhile, is looking to shore up its skin-care business.

In shopping its beauty lineup, P&G approached a number of potential buyers, including Henkel AG and Unilever, people familiar with the matter have said. Henkel has since dropped out of the race to acquire the assets, according to one person with knowledge of the process.

Wella, at the time, was reportedly valued at $5.5 billion to $7 billion. Henkel not only has an existing hair-care business, but it also has about 4.5 billion euros ($5 billion) in cash and financing available to do deals.

Chief executive officer Kasper Rorsted has also been vocal about doing acquisitions. Henkel was in a strong position to outgun competition from private-equity firms like CVC Capital Partners and Bain Capital, which were mainly interested in Wella’s professional unit.

Rorsted fired the starting gun on his acquisition spree in 2014, spending about 1.8 billion euros on a string of companies including three U.S. professional haircare businesses. Strong sales of salon coloring products mean the professional part of the haircare industry is the most attractive, Rorsted said in March.

Wella, which helped invent products to create the permanent wave in 1927, recently sealed a deal for Wal-Mart Stores Inc. to be the sole U.S vendor of a new premium line of its Persil detergent.

Since P&G took control of the unit, Wella’s sales to small salons have likely declined as the company’s distribution network concentrated on major customers like Metro AG and Wal-Mart, according to Heiko Feber, a Bielefeld, Germany-based analyst at Bankhaus Lampe.

P&G’s share of the hair-care market in Western Europe has fallen from 18.4 percent in 2005 to 17.8 percent last year, while Henkel’s has risen from 10.4 percent to 13.6 percent over the same period, according to data compiled by Bloomberg Intelligence. P&G and Henkel are ranked second and third respectively in the region with L’Oreal SA the top player.

Lafley rejoined P&G in May 2013, almost four years after stepping down, with a remit to help it regain customers in key categories such as detergents and beauty. Known for big moves, such as his $57 billion acquisition of Gillette Co. in 2005, Lafley replaced Bob McDonald, whose strategy was deemed by some investors and analysts as too timid.

P&G has been working with Goldman Sachs Group Inc. on a possible sale of Wella since at least December as it seeks to divest slower-selling brands that account for about 10 percent of revenue, people familiar with the discussions said at the time. It could sell as many as 100 product lines.

In addition to Wella, P&G is also seeking to sell its fragrances business and some beauty brands, sources said in March.

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