Revlon To Buy Elizabeth Arden For $870 Mln

(RTTNews) - Cosmetics maker Revlon Inc. (REV) has agreed to buy rival Elizabeth Arden Inc. (RDEN) for about $870 million in cash. Shares of Elizabeth Ardent surged a near 50 percent following the news.

Revlon will pay $14 per share in cash for each Elizabeth Arden share, which represents a 50 percent premium to the stock's closing price on Thursday.

With the acquisition of Elizabeth Arden, Revlon will be able to expand its global footprint and also have a presence in categories like skin care, color cosmetics and fragrances as well.

New York-based Revlon said it expects to achieve cost synergies of about $140 million by eliminating duplicative activities, leveraging purchasing scale, and optimizing the manufacturing and distribution networks of the combined company.

Revlon Chief Executive Fabian Garcia said, "This acquisition is strategically and financially compelling. Combining our brands, talent, and global distribution will give our company a significant presence in all major channels and categories, while accelerating sales growth in existing and new geographic regions."

Meanwhile, Revlon also said that in 2016, without taking into account of the pending acquisition, the company expects to generate sales of between $2.0 billion and $2.1 billion. Analysts currently estimate revenues of $1.91 billion in 2016.

REV closed Thursday's trading at $31.15, up $0.06 or 0.19%, on the NYSE. The stock further gained $0.15 or 0.48% in the after-hours trade.

RDEN closed Thursday's trading at $9.31, down, $0.02 or 0.21%, on the Nasdaq. The stock, however, gained, $4.65 or 49.95% in the after-hours trading.