Regis merges with Alberto-Culver's Sally Beauty business

11-Jan-2006 - Last updated on 19-Jul-2008 at 18:55 GMT

Leading salon hair care provider Regis says it has agreed to merge
with Alberto-Culver's ailing Sally Beauty business - a move that is
estimated to transform Regis into a $4.5 billion global
professional beauty company.

Regis said that the details of the agreement mean that one of its subsidiaries will merge with Sally Beauty after it has been spun-off by Alberto-Culver to its stockholder.

Once the spin-off and merger are completed Sally Beauty shareholders will have the right to convert their shares into Regis shares at 60 per cent of their current value. Eventually stockholders of Alberto-Culver will own approximately 54.5 per cent of the shares of the combined company.

The deal, which Alberto-Culver says will carry a $2.6 billion price-tag, also means that Regis will take on the estimated $400 million Sally Beauty debts.

The companies are expecting that the transaction will be completed in the early summer of 2006, subject to stock exchange, antitrust and internal revenue regulations. The newly combined company will then remain headquartered in Minneapolis under the same name and headed up by Regis CEO Paul Finkelstein.

Regis, which is currently a leading hair salons and hair restoration business in the US, is buying into one of the largest professional beauty supply networks in the world - currently comprising 2,419 Sally Beauty Supply stores, 822 Beauty Systems stores and a direct sales force of 1,244.

In the financial year ending September 2005 Sally Beauty had a turnover of $2.25 billion and pre-tax earnings of $224 million, but combined with the Regis business, the turnover is predicted to reach $5 billion by 2007.

Finkelstein said of the transaction: "The combined company offers powerful distribution capabilities and considerable opportunities for operating efficiencies, both of which will benefit our customers."

Alberto-Culver chairman, Carol Bernick pointed out that recent moves by the company to separate Sally Beauty from its Consumer Products division had done much to grow the business, putting it in a stronger position for the proposed merger.

"Our Consumer Products group and Sally Beauty Company have both matured into strong, independent businesses," she said.

"By separating the companies, we have better positioned them to execute their business strategies and compete more effectively. We believe this transaction will provide strong benefits for the shareholders of both Alberto-Culver and Regis Corporation."