Revlon pays 50% premium for outstanding shares in a bid to boost sales and growth
Revlon has announced it is due to buy all of the outstanding shares of Elizabeth Arden for a total of $870m.
At a cost of $14 per share, Revlon is paying a 50% premium on Elizabeth Arden’s closing price of $9.31 on 16 June, but Revlon says the deal will help boost its global impact. Revlon will acquire Elizabeth Arden’s brands including skin care, colour cosmetics and fragrances. Revlon says that these are “highly profitable categories key to future industry growth” and believes that this offering will complement its own portfolio of colour cosmetics, hair care, male grooming, deodorants and beauty tools, helping it to boost sales and growth worldwide.
The transaction adds a prestige skin care and cosmetics brand to Revlon’s current offering and brings a number of popular celebrity fragrance ranges including Britney Spears and Elizabeth Taylor. Elizabeth Arden is present in 120 countries worldwide, including Asia Pacific, which Revlon says will strengthen its geographic positioning.
The deal comes after some speculation that Revlon would itself be a target for acquisition, after several years of faltering sales. Elizabeth Arden has also reported disappointing sales in recent years, suffering particularly with the declining popularity of celebrity fragrances due to its focus on this sector.
Fabian Garcia, President and CEO at Revlon, said: “Revlon plans to build upon Elizabeth Arden’s ongoing transformation by further enhancing the brand, with even more vibrant and relevant product development and marketing, while carefully preserving its unique heritage within prestige. 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. We look forward to bringing together our two top-notch teams to form a global leader in beauty.”
Scott Beattie, Chairman, President and CEO at Elizabeth Arden, added: “We believe this is a compelling transaction that delivers certain value to our shareholders, while recognizing the unique equity in the Elizabeth Arden brand, our impressive fragrance portfolio and global footprint, as well as the positive momentum and growth potential for our business. We look forward to working with the Revlon leadership team to create a leading global beauty company, able to provide accelerated growth for the Elizabeth Arden-branded products as well as our prestige licensed fragrance portfolio, and broader opportunities for many of our employees.”
The deal is the biggest acquisition for the cosmetics industry since the $12.5bn deal that saw Coty purchase almost all of P&G’s beauty business last year. That deal is expected to complete later this year. The Christina Aguilera range of fragrances was initially included in the acquisition, but it was later sold to Elizabeth Arden earlier this year.