Revlon To Acquire Rival Firm -- WSJ
June 17 2016 - 3:03AM
Dow Jones News
By Sharon Terlep
Revlon Inc. agreed to buy rival Elizabeth Arden Inc. on
Thursday, months after Revlon's largest shareholder contemplated
putting the cosmetics company up for sale itself.
The $420 million all-cash deal will expand Revlon's presence in
categories such as skin care and perfume and give it a broader
geographic footprint, creating a company with combined annual sales
of roughly $3 billion. The deal also will help Revlon refinance its
heavy debt load.
Both businesses have struggled in recent years. Revlon has been
weighed down by its debt, while celebrity fragrances, a key part of
Elizabeth Arden's portfolio, have fallen out of favor.
It comes six months after controlling shareholder and Chairman
Ronald O. Perelman disclosed he was exploring strategic
alternatives for Revlon. Since then, Revlon's former CEO Lorenzo
Delpani stepped down and in March, the cosmetics giant brought in
Fabian Garcia, an outsider who was chief operating officer at
Colgate-Palmolive Co. It also bought some smaller businesses from
Coty Inc.'s Cutex business.
Elizabeth Arden is "one of the last independent iconic brands in
the cosmetics industry," Mr. Garcia said. The company says the deal
is expected to close by the end of 2016.
Revlon said it would pay $14 a share for Elizabeth Arden, a 50%
premium to the company's closing stock price. The company will use
$2.6 billion of new financing commitments from BofA Merrill Lynch
and Citigroup to fund the purchase and to refinance Arden's
existing debt, as well as much of Revlon's $1.8 billion in
long-term debt.
Shares of Revlon, which have risen 11% this year, are down 15%
from a year ago. The stock nudged slightly higher in after-hours
trading to $31.30. Elizabeth Arden's sales jumped 50% on the news
to just below the $14 offer price, but are down 31% from a year
ago.
Revlon said it expects the deal to produce $140 million in
savings over three to five years. Revlon forecast its 2016 sales to
be between $2 billion and $2.1 billion, excluding the acquisition
and impact of currency fluctuations.
Elizabeth Arden, which was founded in 1910 in New York, sells
perfumes and cosmetics under its own brand, as well as making
fragrances for a roster of celebrity trademarks such as Justin
Bieber, Mariah Carey and Taylor Swift. The company's sales have
weakened in recent years and it hasn't produced an annual profit
since 2013.
The deal price is roughly half of what Elizabeth Arden nearly
sold for two years ago when it was trading close to $30 a
share.
Write to Sharon Terlep at sharon.terlep@wsj.com
(END) Dow Jones Newswires
June 17, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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