Private equity firm Rhône Capital announced last week that it is planning to acquire another 6.4 million shares of Elizabeth Arden at US$17 a share, in addition to the 50,000 shares it purchased on 19 August. The 19 August shares were Arden’s Series A preferred stock and at the same time Rhône also acquired warrants to purchase another 2.5 million shares of Arden’s common stock. The new move would bring its percentage of Arden shares up to 20%. Rhône has an agreement with Arden which caps its investment in the beauty firm at 30%. The agreement also entitles the private equity firm to place a member on Arden’s board and possibly a second member if certain conditions are met. This latest announcement left Arden shares unchanged at $16.92 on the Nasdaq, but the 19 August purchase sent shares tumbling by 23.3% as Wall Street attempted to anticipate Rhône’s intentions with the beauty firm. Arden is struggling, with profits heavily impacted by poor sales of its celebrity fragrances in recent quarters.
Rhône, which is the private equity arm of Rhône Group, was founded by Robert Agostinelli and M. Steven Langman in 1995 and also has a minority stake in Coty. Working with Berkshire Partners and the Reimann family, it was instrumental in enabling Coty’s IPO last year – a move that gave it very strong voting rights within the company, despite its modest stake.
