REVLON MOVE TO GO PRIVATE COULD MAKE HEALTH BUSINESSES

Executive Summary

REVLON MOVE TO GO PRIVATE COULD MAKE HEALTH BUSINESSES candidates for divestiture. Revlon's controlling investment group, MacAndrews and Forbes, said March 6 that it is "considering making a proposal to acquire all of the common stock of Revlon Group not already owned by it and its affiliates at a price of $18.50 per share, in cash." The offer is dependent on receipt of financing, according to a release. MacAndrews and Forbes is the holding company formed by Pantry Pride Chairman Ronald Perelman to buy Revlon. The group holds preferred stock and warrants giving it an approximately 32% stake in voting control of Revlon, according to an Oct. 30 filing with the Securities & Exchange Commission. Under Perelman, Revlon has sold off a number of its health care businesses, including Technicon, Norcliff Thayer and its ethical drugs business. The firm has said it is committed to its remaining health interests -- ophthalmic businesses Barnes-Hind/Hydrocurve and Coburn, and reference lab business National Health Labs. However, Revlon recently has been engaged in a spate of cosmetic purchases, including the acquisition of Max Factor, Halston and Almay, and a tentative offer for Germaine Monteil. To continue on that acquisition trail and buy out the approximately 42 mil. shares outstanding, Revlon could need new cash from divestitures. The market apparently thinks management can come up with the cash -- Revlon closed March 6 at 18-1/8 after heavy trading. Revlon currently has 41.88 mil. shares outstanding. At $18.50 a share, the proposed offer would put a $774.7 mil. value on the deal. Pantry Pride paid about $1.7 bil. for the business. The company later recouped almost the whole purchase price through divestitures ("The Gray Sheet" March 10, I&W-1). At the end of September, Revlon had approximately $2.6 mil. in debt.