Alberto-Culver Will Spin Off Its Sally Beauty Retail Division
Hair care products maker Alberto-Culver Co. said Monday that it would spin off its Sally Beauty business into a separately traded company after its sale to Regis Corp. fell apart this year.
The unit, the world’s biggest seller of professional beauty supplies, will become a stand-alone business called Sally Beauty Co., operating 2,465 Sally Beauty stores and 825 Beauty Systems Group outlets with 1,181 sales employees. It generated $2.3 billion in sales for the 12 months ended March 31, with pretax operating earnings of $244 million.
The spinoff will leave Alberto-Culver with its core consumer products business, which generated revenue of $1.4 billion and pretax operating earnings of nearly $140 million in the 12 months ended March 31.
The company said the move would help it focus on its Alberto VO5, St. Ives, Nexxus and other consumer brands.
“I believe the growth potential for an independent consumer products group and an independent Sally Beauty Co. should provide substantial benefits for the shareholders of both companies,” said Carol Lavin Bernick, executive chairman of the board at Alberto-Culver.
Howard Bernick, Alberto-Culver’s president and chief executive, will retire from the company and board after the spinoff is complete. V. James Marino, president of the consumer products unit, will become the company’s president and CEO.
Under the separation, shareholders will receive a special dividend of $25 for each share they hold. After the spinoff, they will receive one share of Alberto-Culver stock and one share of Sally Beauty stock per Alberto-Culver share.
Alberto-Culver’s board unanimously approved the spinoff, which is expected to be completed by year-end pending shareholder and regulatory approval.
“At first glance, the deal looks to be a fair one for shareholders, resolving conflicts between the two businesses that had become increasingly difficult to reconcile,” Morningstar analyst Lauren DeSanto said in a note to investors.
Alberto-Culver shareholders will own 52.5% of the new company, which will be listed on the New York Stock Exchange, and a fund managed by Clayton, Dubilier & Rice will acquire a stake of about 47.5%.
Alberto-Culver shares rose 93 cents, or 2%, to $47.61.
