CVSL Inc., run by Mary Kay Inc.’s former chairman, offered to buy Blyth Inc. for about $269 million to expand the number of direct-sales brands it operates.
CVSL has offered $16.75 a share in cash or CVSL shares, Blyth said in a statement today. CVSL proposed to buy Blyth for that amount in a letter to the company last week, two people with knowledge of the matter said yesterday. Though executives of the company met last week, they didn’t discuss a combination, Blyth said in today’s statement. Blyth said its board will review the proposal.
CVSL’s Chief Executive Officer John Rochon was chairman of Mary Kay -- the cosmetics seller known for giving pink Cadillacs to top sales representatives. Rochon, 62, took over Computer Vision Systems Laboratories Corp. in 2012 to create a new direct-sales business focused on the health, home and beauty sectors.
The company has since acquired Tomboy Tools Inc. and Agel Enterprises LLC, which makes nutritional and skin-care products. Adding Blyth would offer economies of scale, lower capital spending and advantages for the companies’ sales forces, Rochan said in a statement.
While the offer is a good deal for CVSL, it’s bad for Blyth shareholders, said Craig Sterling, managing director and head of global equity research at EVA Dimensions in New York, in a telephone interview. Sterling said he’s surprised Blyth management would consider the offer as CVSL is “getting a good company and paying nothing for it.” He said the intrinsic value of Blyth’s stock should be twice the current price.
After gaining 21 percent yesterday, Blyth fell 6.6 percent to $14.47 in New York. CVSL rose 24 percent to 74 cents.
CVSL’s offer is a 31 percent premium to Blyth’s closing price of $12.76 on Oct. 25, the last trading day before the offer was reported. Before yesterday’s gain, the shares had fallen 18 percent this year.
Blyth, which sells candles, fragrances and ViSalus weight-loss products, said in August that revenue fell 32 percent to $211.7 million in the second quarter from a year earlier. The company, citing slumping sales of ViSalus, also cut its full-year earnings outlook at the time.
Rochon oversaw a sixfold increase in revenue to about $3 billion at Mary Kay from the time he led its leveraged buyout in 1985 to when he left in 2001. As the founder and chairman of Dallas-based Richmont Holdings Inc., he also mounted takeover attempts for competitor Avon Products Inc. in the late 1980s and early 1990s.