Parlux CEO withdraws buyout, giving way to possible sale
offer on the back of pressure from shareholders, investor
confidence in the company is sending share prices into a dramatic
fall, which is likely to spell take-over bids.
At the close of business yesterday, shares ended another day of turbulent trading on NASDAQ at $8.56, down from $18.74 before the buyback offer was first announced, on June 13.
The Lekach-led investment group PF Acquisition of Florida said it had withdrawn its offer in view of 'several significant offers' to acquire its brand by other businesses, suggesting that Parlux could soon be carved up by other leading fragrance providers.
The buyout"triggered substantial interest in our activities that, if pursued after the Company became private, could be misconstrued," Lekach said in a statement.
"To serve the best interests of all shareholders, I asked my associates to withdraw the proposal to allow management and the board of directors to collectively focus on new offers in the best interest of all shareholders," Lekach added.
PF Acquisition had originally proposed to buy up all remaining private shares in the company at $29 a share, giving the company an estimated value of $200m. However Parlux rejected the offer, saying that the deal did not appear to be in the best interests of shareholders.
The company has already announced earlier this month that its shares would be de-listed from NASDAQ, citing the fact that its increased business activities had led to a shortfall in its administrative division, which meant that it would not be able to file its annual report in time.
But despite the delays, the company says that it is not expected to affect estimated full year results of $182m in net earnings and net earnings per share of $2.13.
In 2005 the company's net earnings grew 20 per cent to reach $100.4m, suggesting the company's savvy marketing strategy and sponsorship deal has put it on a road to even greater success this year.
Should the business be put up for sale, the jewel in the crown is undoubtedly the Paris Hilton brand, which has been the main driving force behind the company phenomenal financial success over the past year.
Fierce public interest in the media figure and heiress has led to the proliferation of Paris Hilton fragrances, jewelry and handbags, which have all been marketed by Parlux with huge success.
