Elizabeth Arden to review tender offer by Rhone Capital
Elizabeth Arden Inc. said Wednesday that investment holdings affiliated with Rhone Capital L.L.C. began a partial tender offer to acquire about 20 percent of the company's stock at $17 a share.
The news follows an announcement by the cosmetics company on Aug. 19 that the investment firm had agreed to purchase $50 million of redeemable preferred stock and warrants to purchase 2.5 million common shares at an exercise price of $20.39, representing about 7.6 percent of the company's outstanding shares. Rhone Capital had said that it advised Elizabeth Arden it would agree to increase its ownership of the company's common stock over time.
It also said at the time that it wouldn't acquire more than 30 percent of the company's common stock after exercising its warrants.
Elizabeth Arden said Wednesday that it intends to evaluate the offer within 10 business days. It also requests that its shareholders defer taking action until its board weighs in.
Shares rose more than 5 percent, or 88 cents, to $18.16 in afternoon trading on news of the expanding stake.
The investment firm's increased stake comes as Elizabeth Arden announced that its loss widened in the latest quarter as demand declines for its celebrity fragrances, particularly the Taylor Swift and Justin Bieber brands.
The Miramar, Florida-based company reported a loss of $155.9 million, or $5.24 per share, in the quarter that ended on June 30. Adjusted for one-time items, its loss came to $1.04 per share — still far worse than the loss of 33 cents per share analysts surveyed by FactSet had predicted.
In the fiscal fourth quarter a year ago, Elizabeth Arden's loss was $5 million, or 17 cents per share.
Revenue fell 28 percent to $191.7 million from $267.6 million, below the $241.7 million analysts predicted.