Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, April 10, 1991 TAG: 9104100138
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: The New York Times
DATELINE: LENGTH: Medium
People familiar with the details and progress of the negotiations said Tuesday that Procter & Gamble and Revlon were scheduled to sign a letter of intent today and that the deal would close soon.
The Max Factor division, whose products include the Almay line of hypoallergenic cosmetics as well as the Max Factor brand of makeup, had annual sales in 1990 of $621 million, analysts estimate.
The German subsidiary being sold, Betrix, is a beauty aids company whose 1990 sales are estimated by analysts at $216 million.
The two operations together represent about 30 percent of Revlon's total annual sales.
A sale price of $1 billion would indicate that Revlon sold the assets at a 1.2 multiple, the lower end of the price range it was seeking.
Procter & Gamble has the leading brand of mass-market cosmetics, Cover Girl, which has about 23 percent of the market. Adding Max Factor and Almay would give it a 30 percent share.
Some analysts had been concerned that if Procter & Gamble bought all of Revlon's mass-market brands, giving it 44 percent of the market, the company could face antitrust action.
Revlon has been trying to sell all or most of its assets since the beginning of the year. It has said that Perelman's strategy has been to acquire companies, improve their performance and then sell them.
The company has denied that big interest payments from its high-yield "junk bonds" have forced it to look for buyers for the assets. But analysts say that Revlon has $816 million in debt due in 1992, mostly to banks, and $475 million in bond debt due in 1995.
Perelman took over Revlon and took it private in the 1980s with junk bonds.
Revlon, analysts say, cannot meet those payment through cash flow from a cosmetics business hurt by recession and overbuilding by major retailers like department stores and discounters.
Details of the planned sale are sketchy but the transaction would leave intact the Revlon brand's domestic and international cosmetics business, while paying down much of the $1.5 billion bank debt that has imposed operating constraints on Perelman and Revlon.
Perelman was traveling Tuesday and could not be reached for comment.
At its headquarters in Cincinnati, a Procter & Gamble spokesman declined to comment on the deal.
by CNB