BCI to Sell Personal Products Unit : Executive Group to Pay $1.2 Billion, Resell Part to Revlon
which include Playtex, Max Factor, Almay and Halston--for $1.25 billion to a management group headed by Joel E. Smilow, head of its International Playtex division.
Separately, the management group, in which BCI Holdings will have a 20% equity interest, confirmed that it would be selling the cosmetic and fragrances businesses to Revlon Group, a New York-based producer of beauty and vision-care products.
Smilow’s group, which includes Drexel Burnham Lambert in the leveraged buyout, declined to put a value on the Revlon deal, but Wall Street sources put a $375-million price tag on the transaction. In a leveraged buyout, a group of investors acquires the corporation by borrowing against the assets of the company.
Industry sources had said Wednesday that BCI was very close to an agreement with the management group that would, in turn, provide the framework for the Revlon transaction.
The Beatrice personal products group has annual sales of more than $1.1 billion. Playtex produces intimate apparel and family products, including Playtex Tampons, household gloves and disposable instant feeding systems. Jhirmack hair-care products are also included in the sale.
Playtex accounts for about $600 million to $650 million of the group’s sales, and the cosmetics and fragrance businesses about $500 million. If Revlon completes the purchase of Max Factor, Almay and Halston, it is expected to jump from third place--behind cosmetics makers Maybelline and Cover Girl--to the No. 1 position, with estimated annual sales of $1.7 billion.
Asked why he bothered to buy the cosmetics and fragrances business only to sell them immediately, Smilow said: “It is of no concern to BCI whether Revlon buys that (Max Factor and the two other companies).
“If Revlon were to decide not to do it prior to a definitive agreement being signed, we would then buy and keep the whole thing,” he explained in a telephone interview from his offices at Playtex headquarters in Stamford, Conn. “It was a lot simpler for Beatrice to do one transaction and leave it to us to work out the split-off.”
Smilow, who joined Playtex as president in 1969, left the company briefly in 1984 and returned late last year when BCI acquired Beatrice in a leveraged buyout for more than $6 billion. He said when he joined BCI that he thought there would be a possibility that Playtex would be sold or made public in two or three years.
“There were no guarantees and no commitments from anybody,” he explained. “The only thing that was a major surprise was that it started April 17 (the day BCI took over Beatrice). I didn’t have to wait three years.
“What I was hoping to do is to head a free-standing independent company, as opposed to a subsidiary of a huge company. This is kind of a dream come true.”
