Parlux stakeholder hints at take-over

By Simon Pitman

- Last updated on GMT

Related tags: Parlux, Paris hilton

Glenn Nussdorf, who has a 10.5 per cent stake in troubled fragrance
player Parlux, has made an SEC filing stating his intentions to
acquire a controlling stake in the company as a business
combination transaction to prevent it from being sold off
piecemeal.

Nussdorf said that he and his representatives have had preliminary discussions with the company's management, as well as potential sources of funding as a first step towards brokering the proposed deal - although it has been stressed that no firm decision has been made to go ahead with the deal.

Obviously the first hurdle to get over will be to clear the deal with Parlux management, and with company founder Ilea Leckach still firmly in the driving seat as company CEO, brokering such a deal is certainly not going to prove to be a straight forward transaction.

Leckach tried to sell off Parlux's biggest brand, Perry Ellis, a deal that was foiled two weeks ago, thanks in no small part to lobbying by Nussdorf and his business associates who claimed that they opposed the deal on the grounds that it made no business sense and that the proposed buyer, Victory International, did not have sufficient finance in order to close the deal.

So why should Glenn Nussdorf be playing such a big role in all of these proceedings? The answer is simple, his role in the fragrance business goes beyond just having a large stake in the Parlux business.

With his brother, Stephen Nussdorf, he owns 37 per cent of E Com Ventures and together with their sister Arlene Nussdorf, they control Model Reorg - companies that do significant business with Parlux as well as other major fragrance businesses.

This move falls part of a long line of events that has set Parlux on a rocky path, ultimately sending the company's share prices into free fall. Shares have been trading at an average of $5 per share, down from a high of $19 in March.

However, after investors got wind of Nussdorf's intentions earlier on in the week, shares have since jumped back past the $7 mark, suggesting that a potential take over could spell a brighter future for the company.

If Nussdorf does go ahead with the deal, it will be expected that he will want to hold on to the company's current portfolio of fragrance licenses, with the intention of rebuilding its reputation and restoring growth.

Last year it was growth in the sale of Paris Hilton fragrances and branded designer goods that helped the company's sales turnover to more than double from $47.44m in 2004, to reach $111.77m in 2005.

However, sales have slowed considerably recently, with the company blaming slowing retail activity in the US market for a downturn in the most recent quarter.

Parlux, is the license holder to big fragrance names such as XOXO, Ocean Pacific and tennis star Andy Roddick, and really hit the big-time by licensing deal to produce fragrances and asscessories using the name and image of media figure and heiress Paris Hilton.

Related topics: Business & Financial, Fragrance

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