Alberto-Culver spins off Sally Beauty-Again
Alberto-Culver spins off Sally Beauty-Again
Alberto-Culver spins off Sally Beauty-Again
Alberto-Culver Co. yesterday announced its intention to separate the company's consumer product business from its beauty supplies distribution business, Sally Beauty Co.
Under the plan, which has been unanimously approved by the Alberto-Culver board of directors, the company's shareholders will receive a special $25 per share one-time cash dividend for each
Alberto-Culver Co. shareholders will own approximately 52.5 percent of the shares of Sally Beauty Co. which will become a new public company listed on the New York Stock Exchange.
An investment fund managed by Clayton, Dubilier & Rice will invest at least $575 million to acquire an equity stake of approximately 47.5 percent in Sally Beauty Co. Approximately $1.85 billion of new debt will be arranged by Merrill Lynch. These combined amounts will be used to fund the special $25 per share cash dividend.
Sally Beauty Co. will become a standalone publicly traded company with its 2,465 Sally Beauty stores, 825 Beauty Systems Group outlets and an 1,181-person direct sales force calling directly on its salon customers. Sally generated revenue of $2.3 billion for the year ended March 31, and had pre-tax operating earnings of $244 million.
Gary Winterhalter will continue as president of Sally Beauty Co. and following the separation, will assume the chief executive officer role and will join the Sally Beauty Co. board of directors. Sally Beauty Co. chairman Michael Renzulli has entered into a three-year consulting agreement with Sally Beauty Co. CD&R will designate six of the 12 directors to be appointed to the Sally Beauty Co. board, including the chairman.
Alberto-Culver will be a global branded consumer products company with brands such as Alberto VO5, St. Ives, TRESemme, Nexxus, Motions and Soft & Beautiful and a portfolio of regional brands in the beauty and household categories. The current operating management team for Alberto- Culver Consumer Products Worldwide will remain in place, according to the company. The consumer products unit generated revenue of $1.4 billion for the year ended March 31, and had pre-tax operating earnings of nearly $140 million.
Carol Lavin Bernick will continue in her role as executive chairman of the board of the Alberto-Culver Company.
After the closing, James Marino will become Alberto-Culver's president and chief executive officer and will join the Alberto-Culver Co. board. He is currently president of Alberto-Culver Consumer Products Worldwide.
Howard B. Bernick, Alberto-Culver president and chief executive officer, will retire from his position at Alberto-Culver and from the Alberto-Culver board of directors after the spin-off is accomplished.
Bernick said the two businesses have faced growth constraints caused by customer and vendor conflicts between the units which will now be eliminated.
"I believe the growth potential for an independent consumer products group and an independent Sally Beauty Company should provide substantial benefits for the shareholders of both companies," Bernick said.
The transaction is expected to be completed in the fourth quarter of the 2006 calendar year subject to customary closing conditions, shareholder approval, the obtaining of a ruling from the Internal Revenue Service and other regulatory approvals.
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