US: Revlon To Acquire Elizabeth Arden

Revlon has announced a deal to acquire Elizabeth Arden, in a move aimed at boosting its presence in the global premium skincare and fragrance markets.

Revlon offered $14-per-share for Elizabeth Arden, valuing the deal at $420m.  The deal additionally includes around $450m in debt. The group will fund using new financing from BofA Merrill Lynch and Citigroup.

The deal will create a combined entity with revenues of around $3bn. Revlon said it expects cost synergies of around $140m in three to five years following the completion of the deal, adding that the acquisition will “leverage Revlon’s scale across major vendors and manufacturing partners, improving distribution and procurement”.

The deal comes just months after Chairman (and controlling shareholder) Ron Perelman said Revlon would consider strategic alternatives to compete better with larger rivals such as L’Oreal.  The acquisition comes as a surprise, as Revlon was expected by analysts to divest brands or put itself up for sale in order to focus on core operations.

Elizabeth Arden has seen its sales and share price fall in recent years, but CEO Scott Beattie said the scale of the combined company will help attract new licenses in perfumes and drive growth in sales of some fragrance brands.

NAM Implications:
  • A surprise move that has to result in changes to the competitive landscape, at least at the premium end…
  • Apart from raising questions re other possible acquisition possibilities…