Elizabeth Arden Inc. (RDEN), the maker of celebrity fragrances for Taylor Swift and Justin Bieber, said it’s evaluating a tender offer by Rhone Capital LLC’s funds to acquire as much as 20 percent of the company.
The company’s board and management are consulting with financial and legal advisers on the offer, which is now under way, according to a statement today. Rhone, a private-equity firm, is looking to acquire more than 6.4 million shares, a move it announced earlier this week.
Rhone and its affiliates had previously made a strategic investment in the company through the purchase of preferred and common stock, bringing its stake to 7.6 percent. It also signed a standstill agreement with the fragrance company saying it wouldn’t acquire more than 30 percent of the common shares. As part of the deal, which was disclosed last week, Rhone gained the right to name one member to the board.
Elizabeth Arden Chief Executive Officer E. Scott Beattie said at the time that the company was excited to have Rhone as an equity partner while it tries to execute a turnaround. The Miramar, Florida-based company has been struggling with a drop in sales of celebrities’ fragrances, particularly Bieber’s and Swift’s.
“Having some fresh ideas in there is a good thing,” Jason Gere, a New York-based analyst at KeyBanc Capital Markets, said in an interview. “It’s going to be an uphill battle to fix the business and get back to where they were, if they can.”
The company said today it would inform shareholders of its position on the tender offer within 10 business days, as required by securities law.
The shares rose 3 percent to $17.79 at the close in New York. Elizabeth Arden has lost about half its value this year, hurt by concerns about sluggish sales and mounting losses.
“When traffic is not very strong and you get a consumer to walk into a Wal-Mart, the last thing on their shopping list is smelling like Justin Bieber,” said Gere, who has a hold rating on the shares.
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