Has Revlon underpaid for Elizabeth Arden?

An investigation is underway concerning the sale of Arden for $14 per share to Revlon

Elizabeth Arden’s Board of Directors is the subject of an investigation by litigation law firm Brodsky & Smith concerning the sale of the company to Revlon.

On Friday it was announced that Revlon is set to buy Elizabeth Arden for $870m or $14 per share. However, Brodsky & Smith is investigating claims that the Board may have breached fiduciary duty – the legal duty to act in another party’s interest – by selling the company for this amount, with some saying it is too little.

If Revlon is seen to have underpaid for the company, then it could result in a loss for long term Elizabeth Arden shareholders.

In a statement issued by Brodsky & Smith, it was noted: “In the transaction Revlon will pay less than one times Elizabeth Arden sales when beauty companies have previously sold for two to three times sales.” Elizabeth Arden stock traded at $18.24 per share on 14 January.

The Revlon/Arden deal is the largest cosmetics industry takeover since Coty agreed to buy 41 of P&G's colour, hair and fragrance brands in July last year.

 

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