Revlon Soars After Billionaire Owner Vows to Explore Options

Updated on
  • No specific plan has been formulated for cosmetics maker
  • Ron Perelman has controlled New York-based company since 1985

Revlon Inc. shares rose the most in more than two years after billionaire Ron Perelman announced plans to explore options for the cosmetics maker, which he controls through his investment company.

Perelman’s firm, MacAndrews & Forbes, will consider “strategic alternatives” for the business, according to a statement Friday. The investor, which owns a 78 percent stake in Revlon, hasn’t formulated any specific or definitive plan or proposal.

Ron Perelman

Photographer: Chris Goodney/Bloomberg

Perelman gained control of New York-based Revlon in 1985 using cash raised with the help of former junk-bond chief Michael Milken. He sought to take the cosmetics maker private in 2009, prompting a lawsuit from other investors that he agreed to settle.

Friday’s announcement buoyed investor optimism after years of profit declines at Revlon. Sales of some of its larger brands have slowed, and the company pulled out of China about two years ago. It’s sought to find new areas of growth by acquiring Colomer Group, giving it Creative Nail professional and Shellac nail polishes.

Revlon jumped 12 percent to $28.08 in the wake of the announcement, the biggest one-day gain since February 2013.

Shares of the company, which owns Almay and other well-known brands, had tumbled 24 percent over the past 12 months before Friday. That reduced its market value to about $1.3 billion. Rival Estee Lauder Cos., meanwhile, rose 14 percent in that period.

Still, Revlon isn’t the only cosmetics company struggling. After years of sales declines, Avon Products Inc. said last month that it would split off its North American business as part of a $605 million deal with private-equity firm Cerberus Capital Management. Operating income in the unit had fallen four years in a row.