Revlon reenters salon business with Colomer buy
(Reuters) - Cosmetics maker Revlon Inc (REV.N) will buy Spanish beauty care company The Colomer Group for $660 million, reacquiring a professional products business it sold 13 years ago.
Colomer Group, owned by CVC Capital Partners, manufactures and sells products such as Revlon Professional hair care under license to salons and other businesses.
Revlon sold its professional products business in 2000 to the Colomer family and CVC Capital Partners for $315 million.
The Barcelona-based company, renamed The Colomer Group (TCG), has since expanded into consumer brands such as Natural Honey body lotions and Llongueras hair care. It gets 40 percent of its revenue from the United States.
"Revlon's reentry into the professional salon channel comes at a time when its U.S. color cosmetics business is treading water," BMO Capital analyst Connie Maneaty said in a note. She maintained her "market perform" rating and $25 price target on the stock.
Revlon's shares rose more than 8 percent to a seven-year high of $26.58 on the New York Stock Exchange on Monday.
"TCG's presence in the professional salon channel, which Revlon currently does not serve, will expand our product offering and enable us to reach new consumers," Revlon Chief Executive Alan Ennis said.
Revlon's revenue for the quarter ended June 30 fell 2 percent to $350.1 million, hit by lower sales of its Almay color cosmetics brand. TCG has annual revenue of 405 million euros ($538 million), according to CVC's website.
Revlon makes and sells cosmetics, women's hair color, beauty tools, fragrances and skincare.
The company, which owns brands such as Almay, Sinful Colors, Mitchum and Charlie, is majority owned by 70-year-old buyout titan Ronald Perelman.
The Wharton graduate began learning the buyout business from his father, attending board meetings when he was in elementary school, according to his Forbes page.
The deal is expected to close in the fourth quarter and be accretive to cash flow and earnings in the first year, Revlon said.
Revlon, said it expects to finance the deal with funds underwritten by Citigroup Global Markets Inc. Citigroup committed to provide Revlon with a new $1.375 billion senior secured term loan facility.
(Additional reporting by Mridhula Raghavan; Editing by Sreejiraj Eluvangal)