Revlon Said to Tap Goldman to Explore Options
Revlon Inc. is said to have tapped Goldman Sachs to explore deal options, according to industry sources.
The company's stock was up nearly 5 percent Thursday on the news, which was first reported by Bloomberg. Revlon is said to be considering selling all or parts of the company.
The last time the company considered strategic alternatives in early 2016, it turned out it was orchestrating the $870 million acquisition of Elizabeth Arden, which is currently the only part of the Revlon business that is doing well.
Arden sales were up 10.7 percent in Revlon's most-recently reported quarter. All the other units — including the Revlon brand — were down. Revlon was down 2.6 percent, the fragrance unit was down 12.9 percent and the portfolio unit, which includes brands like Almay and Sinful colors, was down nearly 20 percent.
On a call with Wall Street analysts at the time, Revlon chief executive officer Debbie Perelman said the company has continued to face problems in North America, a sentiment several other beauty companies have echoed in recent quarters.
Perelman is the daughter of Ronald Perelman, who owned 85.8 percent of the business as of Dec. 31. SEC filings show that Ron Perelman bought additional Revlon shares in early August, bringing him up to more than 87.4 percent ownership.
Ron Perelman's control of the company has been a touchy subject for some smaller shareholders.
After the Arden deal, Revlon got into a spat with shareholder Mittleman Bros., which vocalized concern that Perelman was increasing his ownership position. At that point. MacAndrews & Forbes, the company Perelman owns most of the Revlon stock through, said it wouldn't buy up more than 89 percent of the company's stock without notice.
Beyond slumping sales, Revlon is saddled with debt, and just unveiled a new $200 million senior secured term loan facility that executives said would be used to fund the company's "transformation efforts" as well as invest in core strategies, innovation and general corporate purposes. The loan is secured by the American Crew men's hair-care brand.
SEC filings show the company carrying about $2.7 billion in long-term debt.
That debt load makes it an unlikely target for prospective private equity investors, one financial source said. "This is an old legacy color brand saddled with debt.…I don't know why someone would want to buy it," the source said. Revlon is said to have been out in the market before.
The company has struggled for years, quickly churning through executive management teams while trying revamp the Revlon brand to its former glamorous status and tackle global markets. Data from Nielsen, compiled by Jefferies analyst Stephanie Wissink, shows that Revlon's sales were down 10 percent for the four weeks ended July 27, and that the portfolio brands continued to suffer from shelf space losses.
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