Suit Seeks to Enforce Revlon Deal
An investment firm that had an agreement to buy Revlon’s cosmetics business filed a suit this week accusing Revlon’s new owners of illegally pulling out of the $905-million deal.
In its complaint, Beauty Acquisition Corp., a new firm formed by the New York leveraged buy-out firm of Adler & Shaykin to acquire certain Revlon assets, asked that Revlon be forced to comply with terms of the sale. The filing contended that Revlon had been honoring the written agreement until Pantry Pride took control of the company Nov. 5.
The suit is the second dispute involving anti-takeover defenses that Revlon’s previous management used to thwart Pantry Pride’s unwelcome offer. Earlier this month, the Delaware Supreme Court rejected Revlon’s agreement to sell its health-care businesses to Forstmann, Little & Co. for $1.8 billion.
The Revlon businesses in dispute involve its worldwide cosmetics, fragrance and toiletries operations, which include such brand names as Revlon, Ultima II and Princess Marcella Borghese cosmetics; Charlie, Jontue and Norell fragrances, and Flex shampoo.
They accounted for $1.1 billion of Revlon’s total 1984 sales of $2.4 billion.
A spokesman for New York-based Revlon said there would be no comment “as we now are in litigation.”
The suit is also the latest in a string of legal wranglings that have accompanied the increasingly acrimonious takeover and merger battles. Just this week, a Texas jury awarded an unprecedented $10.5-billion judgment against Texaco for interfering with Pennzoil’s handshake agreement to acquire Getty Oil in 1984. The ruling involved the validity of the oral agreement, not the rules of the merger.
Revlon put together the deal with New York-based Adler & Shaykin as part of a two-stage plan to defeat Pantry Pride.
Pantry Pride was expected to sell off parts of Revlon once it assumed control. But, in its complaint, Beauty Acquisition said that Revlon has indicated to the company and others, including Beauty Acquisition’s financing sources, that the sale “will not close.”
