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Revlon Agrees to Buy Elizabeth Arden in $870 Million Deal

Revlon, the makeup company controlled by billionaire Ron Perelman, will buy Elizabeth Arden Inc. for $14 a share, adding celebrity fragrances and other products to its cosmetics lineup.
Elizabeth Arden store | Source: Shutterstock
By
  • Bloomberg

NEW YORK, United States — Revlon Inc., the makeup company controlled by billionaire Ron Perelman, will buy Elizabeth Arden Inc. for $14 a share, adding celebrity fragrances and other products to its cosmetics lineup.

The transaction values Elizabeth Arden at about $870 million, New York-based Revlon said in a statement on Thursday. The cash transaction represents a 50 percent premium over Elizabeth Arden’s closing price of $9.31.

The deal marks a turnabout for investors, who had been speculating earlier this year that Revlon might be an acquisition target — rather than a buyer. Perelman’s investment firm, MacAndrews & Forbes, announced in January that it would explore strategic alternatives for Revlon. That sent the shares surging as shareholders wagered that a buyout of the company was in the offing.

Instead, Revlon will link up with another well-known cosmetics name that has struggled to maintain growth in recent years. The idea is to gain clout in the industry by building a bigger portfolio of brands that the company can sell around the world.

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“Revlon plans to build upon Elizabeth Arden’s ongoing transformation by further enhancing the brand,” Revlon chief executive officer Fabian Garcia said in the statement. “Combining our brands, talent and global distribution will give our company a significant presence in all major channels and categories, while accelerating sales growth in existing and new geographic regions.”

Financing Deal

Bank of America Corp. and Citigroup Inc. have committed about $2.6 billion to help pay for the acquisition and refinance Elizabeth Arden’s debt, Revlon said. The company expects cost savings of about $140 million from the merger by eliminating duplication, gaining purchasing power and sharing a distribution network.

Elizabeth Arden shares soared as much as 50 percent to $14 in late trading after the deal was announced, in line with the transaction price. Revlon rose less than 1 percent to $31.30.

Speculation that Revlon would be acquired was quelled in March when the company named Garcia as chief executive officer and said the former Colgate-Palmolive Co. executive would revamp the business. Revlon's previous chief executive officer, Lorenzo Delpani, stepped down on March 1, citing personal reasons.

Perelman gained control of New York-based Revlon in 1985 using cash raised with the help of former junk-bond chief Michael Milken. He sought to take the cosmetics maker private in 2009, prompting a lawsuit from other investors that he agreed to settle.

Elizabeth Arden, meanwhile, has been a buyout prospect in the past. South Korea’s LG Household & Health Care Ltd. discussed acquiring the company in 2014, but ultimately decided against it.

In addition to offering skin care and makeup, Elizabeth Arden is known for selling fragrances under names such as Taylor Swift, Britney Spears and Elizabeth Taylor. The celebrity endorsements have not helped the company cope with a competitive market for cosmetics. It has posted almost $400 million in losses during the past two years.

By Nick Turner; editors: Nick Turner and Mark Schoifet.

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