Who will acquire Revlon?

18-Jan-2016 - Last updated on 18-Jan-2016 at 22:13 GMT

That’s the question majority owner Ron Perelman is asking—late last week he filed a statement with the US Securities and Exchange Commission declaring that his investment firm is exploring strategic alternatives involving the company.

The purpose of the filling, as outlined in an amended schedule 13D/A document, is to acknowledge that the current majority owner of Revlon has “determined to explore strategic alternatives involving the Company.”

Buying and selling

Perelman acquired controlling stake in the beauty company in a hostile takeover in 1985. Now, through his investment firm, MacAndrews & Forbes, Perelman owns a 77.6% stake in Revlon and is presumably looking to sell.

Though the filing is officially vague, stating that the firm will occasionally be in touch with third parties regarding possible transactions, as well as strategic and financial matters, the document goes on to make clear that nothing has been decided:

“As of the date of this Amendment No. 2, the MacAndrews & Forbes Reporting Persons have not formulated any specific or definitive plan or proposal relating to the matters described in this paragraph, and there can be no assurance that exploration of any transaction, to the extent undertaken, would result in interest by any third party, or result in a transaction of interest to the MacAndrews & Forbes Reporting Persons, or as to the terms of any such transaction.”

For better or worse

The beauty industry has seen a fair amount of M&A activity lately, so it’s not a stretch to think that Revlon will get some attention.

“On the one hand, it's a buyer beware situation,” explains Tara Lachapelle, writing for Bloomberg’s Gadfly site.

“But on the other, Revlon may just be a somewhat neglected brand that needs a bit of a makeover, in which case there's an opportunity for acquirers that could take a new turnaround approach,” she adds.

Change is good

Financial media is fascinated with how Perelman, after altering the shape of corporate law to get a hold of the company, is now exploring his options to sell in a market that isn’t in his favor.

And investors have perked up too. Revlon's stock price jumped last week to $28.10 following Perelman’s SEC filing, which reports indicate is the largest lift the stock has seen since 2013.

By contrast, “shares of the company, which owns Almay and other well- known brands, had tumbled 24 percent over the past 12 months before Friday,” notes CrainsNewYork.com.