Elizabeth Arden, Inc. (NASDAQ:RDEN) shares rose 49.09% to $13.88 on Friday as investors buzzed about a potential acquisition by Revlon. Shares are trading in a 52-week range of $5.02 to $15.59 so price is already nearing the top.
Word through the grapevine is that Revlon is planning on acquiring Elizabeth Arden for $14 per share or a total of $870 million. Revlon shares also got a boost from these reports. If the deal would push through, the new entity would benefit from greater scale and a larger market. According to the company’s press release, the combination would be “highly complementary” and result to a “diversified presence across major categories and channels.”
Aside from that, the companies could also benefit from $140 million in cost-saving synergies. This acquisition couldn’t have come at a better time for Elizabeth Arden, which is dealing with growing losses over consecutive quarters and has been unable to sustain any growth in any aspect.
Also, consolidation appears to be a trend in this particular industry, following acquisitions from Estee Lauder and Unilever. The deal is still pending approval from shareholders and regulatory agencies but is expected to close by the end of the year.
Elizabeth Arden is a global beauty products company with a portfolio of fragrance, skin care and cosmetics brands while Revlon taps into almost the same market. In particular, Revlon hopes to benefit from Elizabeth Arden’s strength in prestige skincare and fragrances, complementing their strength in lipstick, nail products, hair care, and men’s grooming. Revlon has already acquired Cutex International brand from Coty earlier this year as part of its attempt to revive its dominance in the beauty industry.
The combined company is projected to generate sales of $3 billion and help Revlon refinance its heavy debt load. Prior to this, controlling shareholder Ronald Perelman disclosed that he was considering a sale of the company.
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