Looking for expanded sales opportunities and distribution and procurement efficiencies, Revlon is adding Elizabeth Arden’s skin care, color cosmetics and fragrance products to its lines of color cosmetics, hair care, men’s grooming, antiperspirants, deodorants and beauty tools in a cash deal valued at $870 million, including repayment of debt and preferred stock.
“In a conference call, the CEOs of both companies said the deal will 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.,” Chris Woodyard reports for USA Today.”
A webcast of that call can be viewed here.
“Elizabeth Arden and Revlon are both known for their iconic brands, entrepreneurial spirit and commitment to innovation, quality and excellence,” Revlon president and CEO Fabian Garcia says in a statement announcing the deal. “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.”
Garcia, who had been COO of Global Innovation and Growth at Colgate-Palmolive, succeeded Lorenzo Delpani at Revlon in April. Delpani resigned in February for “personal reasons.”
His departure came “about a month after Revlon’s controlling shareholder and chairman Ron Perelman said he would seek strategic alternatives for the company,” Reuters reported at the time. “The company, known for its Revlon and StreetWear brand cosmetics and Charlie perfumes, has reported a sales decline in three of the past four quarters as consumers increasingly prefer more exclusive brands.”
Indeed, investors had been speculating that Revlon was itself an acquisition target, report Bloomberg’s Stephanie Wong and Lauren Coleman-Lochner. “Instead, Revlon is turning to another well-known cosmetics name that has struggled to maintain growth in recent years.”
L2 analyst Giulia Prati tells them that “both companies are coping with the shift to e-commerce,” although Revlon has been better at it. “Revlon has an opportunity here to share its digital know-how through this deal and bring Elizabeth Arden up to speed,” she says.
Elizabeth Arden chairman, president and CEO Scott Beattie, who will join Revlon’s board as non-executive vice chairman and also serve as a senior advisor to Garcia, characterized yesterday’s deal as “a compelling transaction that delivers certain value to our shareholders, while recognizing the unique equity in the Elizabeth Arden brand.”
In addition to its eponymous skin care, color and fragrance products and professional skin care line, Elizabeth Arden PRO, the company also markets the designer fragrance brands of Juicy Couture, John Varvatos and Wildfox Couture; the heritage fragrance brands of Britney Spears, White Diamonds Elizabeth Taylor, Curve, Giorgio Beverly Hills, Ed Hardy, Jennifer Aniston, Lucky Brand, Paul Sebastian, Halston, Geoffrey Beene, Rocawear, Alfred Sung, White Shoulders and BCBGMAXAZRIA; and the celebrity fragrance brands of Taylor Swift, Nicki Minaj, Mariah Carey and Justin Bieber.
But “celebrity fragrances, a key part of Elizabeth Arden’s portfolio, have fallen out of favor” in recent years, Sharon Terlep reports for the Wall Street Journal.
“This is the second big beauty deal this month, after Shiseido announced in early June that it will acquire makeup brand Laura Mercier and skincare line RéVive,” Adele Chapin writes for Racked, predicting that “more beauty acquisitions might be looming on the horizon.”
“Elizabeth Arden opened her first Red Door salon on Fifth Avenue in 1910," the AP reports, and posted a loss of $28.4 million on revenue of $191.9 million in its most recent quarter. “Revlon was founded in 1932 with the release of its nail enamel. This year, it posted a first-quarter profit of $11 million on sales of $439.6 million.”
For what it’s worth, both brands have connections to Buckingham Palace, Ashley Armstrong reports for The Telegraph. “The Queen reportedly uses [Revlon's] Beautiful Color lipstick in ‘Bold Red’ and Elizabeth Arden has held a royal warrant for the past 54 years.”