Corrections and clarifications: An earlier version of the story did not include Revlon’s purchase price of Elizabeth Arden, which is $419.3 million based on its per-share offer and closing price of Elizabeth Arden stock.
One of the nation's best-known cosmetics makers, Revlon, said Thursday that it is buying rival Elizabeth Arden in $419.3 million deal that adds brands like Giorgio Beverly Hills and celebrity fragrances from the likes of Taylor Swift and Justin Bieber to its portfolio.
The $14-a-share deal establishes the value of Elizabeth Arden at about $870 million, including debt, according to Revlon. The per-share price represents a 50% premium to Thursday's closing price for Elizabeth Arden shares. Revlon, based in New York, hopes to expand its own global reach while adding assets like Elizabeth Arden's core skin-care line. The deal also represents a big move by billionaire Ron Perelman, who controls Revlon through his investment firm, MacAndrews & Forbes.
In a conference call, the CEOs of both companies said the deal with strengthen the brands across the board, from mass market to boutique businesses like salons, while piling up some big cost savings. Although Elizabeth Arden alone has business in 120 countries, about 57% of the combined companies' business will be from sales in the U.S.
"This acquisition is strategically and financially compelling," said Revlon CEO Fabian Garcia in a statement. "Revlon plans to build on Elizabeth Arden's ongoing transformation by further enhancing the brand."
On the call, Garcia called Elizabeth Arden a "highly respected" brand around the world. Now, he said, it will only become stronger. "The combined company will provide us with an excellent platform for growth." As a top-20 company in its categories, "We will be more competitive because we will have greater scale."
Revlon said in a statement that it expects to reduce $140 million in redundant costs between the two companies, which will take three to five years to realize. About 40% of the savings will come in the supply chain and the rest from overhead and general or administrative costs. Arden's debt will be refinanced.
Revlon shares rose about 0.5% in trading after hours, up 15 cents to $31.30. Elizabeth Arden was shares rocketed 50.1%, up $4.67 to $13.91.
Scott Beattie, CEO of Elizabeth Arden, called the deal "a compelling transaction" that rewards shareholders while recognizing the value of the brand.
It "creates an exciting opportunity for our brands, people and provides certainly for shareholders," he said. "We are confident we have found the perfect home for the Elizabeth Arden brands."
