Revlon Could Pay $40 Million for Failed Deal
Revlon Group said Tuesday that it may end up paying more than $40 million to settle claims for backing out of a $905-million deal last year to sell Revlon’s cosmetics unit to Beauty Acquisition Corp.
Revlon Group said it already has paid $21.3 million to Equitable Capital Management Corp., Manufacturers Hanover Trust Co. and Bankers Trust Co., to “partially” settle claims arising out of the agreement. The three firms were to have financed the transaction and thus eventually share in the proceeds, according to a Revlon spokeswoman.
Revlon’s previous management had agreed to sell the cosmetic business as part of its unsuccessful attempt to thwart a takeover by Pantry Pride of Ft. Lauderdale, Fla. After the takeover, the deal with Beauty Acquisition was scrapped. Beauty Acquisition sued Revlon Group to enforce the agreement and to recover unspecified damages.
The settlement with Equitable Capital, Manufacturers Hanover and Bankers Trust is unrelated to the lawsuit, but Revlon announced Tuesday that it is willing to settle that as well.
Revlon Group also said it would be willing to pay $19.45 million to Beauty Acquisition and its controlling shareholder Adler & Shaykin, a New York investment firm, if they agreed to take the settlement offer during the next 60 days. Leonard P. Shaykin, contacted in New York, said he had no comment.
The Beauty Acquisition deal was put together by Revlon’s previous management as part of two-stage plan to defeat Pantry Pride. It planned to sell its cosmetics business to Beauty Acquisition and take the rest of the company private in a $1.8-billion leveraged buyout.
A Delaware court, however, killed the leveraged buyout on the grounds that it blocked the bidding process to the detriment of Revlon stockholders, and the Pantry Pride takeover went ahead.
Soon after Pantry Pride took over Revlon, it announced that the Beauty Acquisition had collapsed because Adler & Shaykin had failed to attend a meeting to complete the acquisition. But Beauty Acquisition and Adler & Shaykin put the blame on Revlon.
