What Are The Possible Changes That Might Happen Due To Revlon’s Integration Of Elizabeth Arden?

January 5th, 2017 by Trefis Team
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Post Revlon’s acquisition of Elizabeth Arden, the company is busy with the integration of the latter into its own business.  As a part of its activities related to integrating its recent acquisition Elizabeth Arden into its own platform, Revlon has decided on consolidating the offices of the two entities, getting rid of duplicate activities, and streamlining operations. Towards that end, Revlon has released an SEC Filing  on January 3rd, stating that it might layoff around 350 employees across the globe. The integration activities are planned to be completed by 2020. In the Filing , the company has also mentioned that it expects to incur around $65 to $75 million of total pre-tax restructuring and related charges due to its integration activities. This can be further broken down to $40 to $50 million employee related costs, around $15 million lease termination costs, and around $10 million of other related charges. For 2016, Revlon will record around $30 million out of the total pre-tax restructuring charges. The company expects to pay all the restructuring charges in cash with $30 million to $40 million to be paid in 2017 and the remaining to be paid over the period through 2020.

What Are Some Of The Advantages That Revlon Gained By Acquiring Elizabeth Arden?

Revlon acquired premium beauty player Elizabeth Arden towards the end of last year for a sum of $870 million. In its Q3 2016 earnings call the company had mentioned that it expects to incur a cost saving to the tune of $140 million as a result of the synergies between the two entities, however, in its current Filing, Revlon also mentioned that the annualized synergies might result in cost savings significantly higher than the previously stated $140 million.

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The upside of this acquisition is expected to be multifold: While there might be a higher contribution of fragrance in Revlon’s portfolio mix, thanks to Arden’s celebrity range of luxury perfumes, the combined entity is expected to generate ~$3 billion in annual sales and $517 million in annual adjusted EBITDA. Revlon’s standalone revenues and EBITDA in 2015 were $2 billion and $360 million, respectively. The acquisition is also expected to expand Revlon’s global footprints into the emerging economies where the growth for beauty products are on a rise. Revlon’s exposure to the travel retail segment is also expected to grow because of Arden’s strong presence in the channel. According to a statement by Revlon’s CEO Fabian Garcia, this deal placed Revlon among the top 20 global beauty companies.

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Notes:

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