Sources tell The Deal’s Sarah Pringle that Ronald Perelman’s MacAndrews and Forbes should tender shares of the company it does not already own and sell the company to a strategic suitor. MacAndrews and Forbes is a majority investor in the company–owning about 78 percent of Revlon–with Perelman as chairman of the company. A tender, suggested by Armored Wolf LLC, would mean that the company would sell the shares it does not already own for about $500 million. While Revlon’s Ebitda margins on average sit at a healthy level north of 19%, Armored Wolf pointed to an enterprise value-to-Ebitda ratio of just 9.6, substantially below the 13.3 average ratio of eight of its global peers. Before selling all of Revlon to a strategic buyer, Perelman should tender for the rest of shares at a 25 percent premium — a typical premium in freeze-out mergers — otherwise a potential takeout price would be depressed by the outstanding minority shares at an artificially low value, Armored Wolf explained in a proposal originally released on buy-side research portal SumZero.com on Dec. 22. The proposal noted a confidential letter that included recommendations was sent to Perelman in August 2014.
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