Sweet Smells From A Parfumerie

Some investors are eagerly awaiting the planned acquisition by Jean Philippe Fragrances of two French companies: Inter Parfums and Selective Industrie. The intriguing thing about this deal is that all three companies are controlled by entrepreneurs Jean Madar (Jean Philippe's president) and Philippe Benacin (Inter Parfums' president).

Jean Philippe is a small producer of inexpensive fragrances that tries to imitate such expensive scents as Passion and Obsession. Jean Philippe's products retail for $3 to $15 an ounce, vs. $30 to $200 for its big-name rivals.

The two French companies that Jean Philippe is acquiring are its major suppliers. Inter Parfums makes fragrances that Jean Philippe distributes exclusively in the U. S. and Canada. Selective Industrie produces Regine perfume, among others, which Jean Philippe sells in the U. S.

If the deal is completed, it will remove conflict-of-interest questions that have been aimed at Jean Philippe and its two French suppliers, says Sharon Sternberger, an analyst at Ladenburg, Thalmann. She recommended the stock in October, when it was selling over the counter for about $1.50 a share. It has since jumped to more than $4. And some investors say it's worth $6 to $8 if the buyout goes through.

A buyout would nearly triple Jean Philippe's sales, currently expected to hit $8 million this year. Sternberger figures the deal won't boost earnings in 1991 since it's a stock swap, thus swelling the number of shares outstanding. But she notes that next year's earnings should be substantially higher than this year's estimate of 43~ a share as new efficiencies take effect. Madar also expects next year's earnings to be sharply higher.

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