Elizabeth Arden Inc. (NASDAQ:RDEN) has inked a takeover agreement with Revlon Inc. (NYSE:REV) for $870 million, or $14 per share, including repayment of Elizabeth Arden debt and preferred stock. The deal is likely to result in a combined entity with greater scale and a richer brand portfolio.
Elizabeth Arden’s shares grew almost 48.0% in pre market trading while Revlon recorded a share price gain of 0.19% on Jun 16, 2016.
The takeover deal represents a 50% premium over Elizabeth Arden’s closing share price of $9.31 as on Jun 16, 2016.
The takeover, which is scheduled to close by the end of 2016, has yet to get approval by Elizabeth Arden’s shareholders and regulatory clearances, though it has been unanimously approved by both Revlon’s and Elizabeth Arden’s boards of directors.
The combined company will also enjoy an expanded global footprint along with a significant presence across all beauty categories. Elizabeth Arden’s strong presence in Asia Pacific will be complemented by Revlon which currently sells its products in approximately 130 countries. With Elizabeth Arden’s presence in important international growth regions, including Asia Pacific, the combined company will be better positioned to compete globally.
Further, the combined entity will benefit from Revlon’s expertise in color cosmetics, hair care, men’s grooming, antiperspirants, deodorants and beauty tools along with Elizabeth Arden’s wide range of licensed prestige fragrances and the internationally recognized line of Elizabeth Arden-branded prestige skin care, color cosmetics and fragrance products.
Moelis & Company (NYSE:MC) , BofA Merrill Lynch of Merrill Lynch & Co. and Citi of Citigroup Inc (NYSE:C) served as financial advisors to Revlon. Meanwhile, Weil, Gotshal & Manges LLP provided legal counsel to Elizabeth Arden for the transaction.
Synergies
Revlon expects to achieve cost synergies of approximately $140 million through the elimination of duplicative activities, leveraging purchasing scale, and optimizing the manufacturing and distribution networks of the combined company.
Leadership
E. Scott Beattie, Chairman, President and CEO at Elizabeth Arden will join Revlon’s board as non-executive Vice Chairman, post the takeover. He will also serve as a senior advisor to Fabian Garcia, Revlon’s President and CEO, and assist a successful integration of the takeover.
Elizabeth Arden was reporting loss for several quarters due to higher cists. Moreover, capital constraint left portfolio elements underfunded. Hence, a partner with a stronger financial position more capable of properly supporting its brands will help it to realize growth in the future.
Elizabeth Arden currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
A better-ranked stock in the broader consumer discretionary sector include Carter's, Inc. (NYSE:CRI) carrying a Zacks Rank #2 (Buy).
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ELIZABETH ARDEN (RDEN): Free Stock Analysis Report
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