Regis to Buy Alberto's Sally Beauty

From Reuters

Personal-care products maker Alberto-Culver Co. said Tuesday that it would sell its Sally Beauty retail chain to beauty-salon operator Regis Corp. in a multi-step deal valued at more than $2 billion.

The deal would leave a much smaller Alberto-Culver focused on consumer products such as Alberto VO5 hairspray and St. Ives lotion, while Regis would combine the Sally Beauty business with its Supercuts, Vidal Sassoon and other salons.

As part of the deal, Alberto-Culver Chief Executive Howard Bernick would leave and become nonexecutive chairman of Regis.

The deal, which would give Alberto-Culver shareholders 54.5% of Regis, eliminates a conflict with suppliers such as Procter & Gamble Co. and L'Oreal that was caused by Alberto-Culver's entry into the premium hair-care supply business when it bought Nexxus Products Co. in May, analysts said.

Under the tax-free deal, each Alberto-Culver shareholder would get 0.6 share of Regis. Based on Regis' closing stock price Monday of $39.52, Alberto-Culver shareholders would receive about $2.2 billion, or $23.71 a share.

Before the deal's closing, Sally Beauty would borrow $400 million, which would be distributed to Alberto-Culver and used to help pay a special one-time cash dividend of $3 a share to Alberto-Culver shareholders.

The deal is expected to close in the early summer, pending regulatory approval, the companies said.

After the transaction, V. James Marino, president of Alberto-Culver's consumer products unit, would become chief executive. Paul Finkelstein, CEO and chairman of Regis, would continue to serve as Regis' CEO.

Alberto-Culver shares fell $1.43 to $46.55. Regis shares gained $3.07 to $42.59.

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