Jenner, 22, the youngest sibling of the wildly popular Kardashian-Jenner clan, a household name a decade after their reality TV show "Keeping up with the Kardashians" became a smash hit, started her make up line with lipstick and lip liner kits in 2015.
The kits sold out within minutes of launching, an early sign of her power as a social media influencer, and Coty said Kylie Cosmetics had an estimated $177 million in net revenues over the past 12 months.
Forbes, making her the youngest self-made billionaire on its 2018 list, said Jenner's line of cosmetics brought in sales of an estimated $360 million in 2018.
Coty will hold 51% of Jenner's business, valuing her company at about $1.2 billion.
"Kylie is a big brand in beauty today. She's very influential ... (but) Coty remains financially leveraged," D.A. Davidson retail analyst Linda Bolton Weiser said.
Celebrities, including Jenner, are leveraging their huge social media following to launch their cosmetics and lifestyle brands and compete with established players in the market.
Social media-powered beauty brands such as Glossier, Jessica Alba's Honest Beauty and Huda Beauty have all notched up about $1 billion in valuation, according to media reports.
Coty has been doubling down on its skin care and fragrance products, rolling out new luxury fragrances and lipsticks, while spending more on marketing to combat falling sales.
The company, which is majority owned by German conglomerate JAB Holdings, has struggled to integrate about 40 beauty brands, including Covergirl and Max Factor, that it bought from Procter & Gamble in 2016, forcing it to take billions of dollars in writedowns and outline a four-year restructuring plan.
The partnership will add to Coty's net revenue growth of its core fragrance, cosmetics and skin care business by more than 1% per year over the next three years, the company said.
The deal is expected to close in the third quarter of fiscal year 2020, Coty said.
(Reporting by Nivedita Balu in Bengaluru; Editing by Anil D'Silva and Patrick Graham)
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